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ССП B) security analysis 16) The efficient market hypothesis suggests that A) active portfolio management strategies are the
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Efficient market hypothesis states that D) passive portfolio management strategies are most appropriate investment strategies. EMH states that security prices fully reflect all available information and no one can beat the market or make excess returns. The passive management investment strategy is based on EMH as it says that stock market is too efficient for active portfolio managers to beat the market since picking undervalued stocks consistently is difficult for them and transaction costs & extra research involved also makes it difficult to outperform the market. Index fund uses passive management strategy and relies on the efficiency of the market to price stocks at fair value.

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