If the markets are efficient, which of the following investors should have above

Question

If the markets are efficient, which of the following investors should have above normal return on assets over time? Define normal as a return that is commensurate with the level of risk that an investor is exposed to and the effort he expends to discover this investment.

Those who choose their stocks by throwing darts at a list of stocks found in the financial pages of a newspaper

Analysts who spend considerable time evaluating the best stocks to buy

Mutual fund managers who manage other people's money for a living

None of the above

Those who choose their stocks by throwing darts at a list of stocks found in the financial pages of a newspaper

Analysts who spend considerable time evaluating the best stocks to buy

Mutual fund managers who manage other people's money for a living

None of the above

Explanation / Answer

Ans. D.

If the markets are efficient, none of the following investors should have above normal return on assets over time

A. Those who choose their stocks by throwing darts at a list of stocks found in the financial pages of a newspaper

B. Analysts who spend considerable time evaluating the best stocks to buy

C. Mutual fund managers who manage other people's money for a living

The reasons are:

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