Question

If the efficient market hypothesis is correct, then a. index funds should typically beat managed funds, and usually do. b. index fund should typically beat managed funds, but usually do not. c. mutual funds should typically beat index funds, and usually do. d. mutual funds should typically beat index funds, but usually do no

Answer 1

Answer:

a. index funds should typically beat managed funds, and usually do.

Explanation:

The efficient market hypothesis is also known as efficient market theory. In financial economics, it is a hypothesis which states that the prices of the assets reflect all the available information. It hypothesizes that the stocks trade at the fair market value on the exchanges. When the efficient market hypothesis is correct, the stock market is informationally efficient and also the index fund usually beat the managed funds.