Question 4 5 pts Which of the following statements is false? 0 If markets are ef

Question

Question 4 5 pts Which of the following statements is false? 0 If markets are efficient, then only those mutual fund managers that have skill will outperform the market. OAn implication of no free lunch is that investors seeking higher returns cannot achieve this without being exposed to higher risk. erkee Market efficiency means that securities are fairly priced meaning that one cannot consistently find over-or underpriced securities value of active management is negative after considering management fees and transaction costs O In efficient markets, investors can still make money in the stock market, but they cannot consistently achieve returns in of the market. Next 40) F5 DDO F2 F3 F4 FI

Explanation / Answer

Statement 1 is false, which is If markets are efficient, then only those mutual fund managers that have skill will outperform the market. In an efficient market, the information is freely available and prices adjust accordingly, thus negating any chance of use of skills for finding mispriced securities and deriving profits. Thus, the statement is incorrect as skills or luck do not play any role in deriving profits in the market.

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