The Efficient Market Hypothesis (EMH) suggests that all available information is already incorporated into the price of securities, and thus, it is impossible to consistently achieve higher than average returns through any strategy, including both active and passive.

a. The suggestion that either active or passive strategies may be appropriate, depending on the expected direction of the market. - This is not a suggestion of EMH. According to EMH, neither active nor passive strategies would consistently outperform the market because all information is already reflected in the prices.

b. The suggestion that stock prices are not random. - This is also not a suggestion of EMH. In fact, EMH suggests that stock prices are random and unpredictable.

c. The suggestion that technical analysis can be used to uncover trends and is quite useful. - This is not a suggestion of EMH. EMH suggests that technical analysis would not provide any advantage because all information is already reflected in the prices.

d. Only two of the suggestions above and/or below are suggestions of EMH - This is not correct. None of the above suggestions are consistent with EMH.

e. All three are NOT suggestions of EMH - This is the correct answer. None of the above statements are suggestions of the Efficient Market Hypothesis.

Question

The Efficient Market Hypothesis (EMH) suggests that all available information is already incorporated into the price of securities, and thus, it is impossible to consistently achieve higher than average returns through any strategy, including both active and passive.

a. The suggestion that either active or passive strategies may be appropriate, depending on the expected direction of the market. - This is not a suggestion of EMH. According to EMH, neither active nor passive strategies would consistently outperform the market because all information is already reflected in the prices.

b. The suggestion that stock prices are not random. - This is also not a suggestion of EMH. In fact, EMH suggests that stock prices are random and unpredictable.

c. The suggestion that technical analysis can be used to uncover trends and is quite useful. - This is not a suggestion of EMH. EMH suggests that technical analysis would not provide any advantage because all information is already reflected in the prices.

d. Only two of the suggestions above and/or below are suggestions of EMH - This is not correct. None of the above suggestions are consistent with EMH.

e. All three are NOT suggestions of EMH - This is the correct answer. None of the above statements are suggestions of the Efficient Market Hypothesis.

Knowee AI · Accepted Answer

The Efficient Market Hypothesis (EMH) suggests that all available information is already incorporated into the price of securities, and thus, it is impossible to consistently achieve higher than average returns through any strategy, including both active and passive.

a. The suggestion that either active or passive strategies may be appropriate, depending on the expected direction of the market. - This is not a suggestion of EMH. According to EMH, neither active nor passive strategies would consistently outperform the market because all information is already reflected in the prices.

b. The suggestion that stock prices are not random. - This is also not a suggestion of EMH. In fact, EMH suggests that stock prices are random and unpredictable.

c. The suggestion that technical analysis can be used to uncover trends and is quite useful. - This is not a suggestion of EMH. EMH suggests that technical analysis would not provide any advantage because all information is already reflected in the prices.

d. Only two of the suggestions above and/or below are suggestions of EMH - This is not correct. None of the above suggestions are consistent with EMH.

e. All three are NOT suggestions of EMH - This is the correct answer. None of the above statements are suggestions of the Efficient Market Hypothesis.

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