Question

Are the following statements true?
Statement 1: In an efficient market, a professional portfolio manager cannot guarantee a superior risk-return trade-off.
Statement 2: An investor who is confident of the efficient market hypothesis will more likely be an active investor than a passive investor.

	A.	Yes.
	B.	No. Both are not true.
	C.	No. Only statement 1 is true.
	D.	No. Only statement 2 is true.

Answer 1

Hello,
Efficient Market hypothesis- EMH is a investment theory where share prices reflect all the information, according to EMH share price trade at a fair value

Option C is correct.

In A EMH an investor more likely to be a passive investor rather than active investor because everything is discounted in the share price.
Statement 1 is correct portfolio manager cannot guarantee a superior risk return trade off.

I hope this clear your doubt.

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