**Question:** According to the EMH, it is impossible to consistently get a non-zero alpha.- ○ True- ○ False**Explanation:** The Efficient Market Hypothesis (EMH) suggests that financial markets are "informationally efficient," meaning that prices reflect all available information. Consequently, it's argued that consistently achieving above-average returns (a non-zero alpha) without taking on additional risk is not possible. This question asks if this statement is true or false, requiring an understanding of EMH and its implications on investment returns.

Answered: According to the EMH, it is impossible…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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According to the efficient market hypothesis (EMH) the market price depicts best forecast that people could make with information at the time. The theory states that the stocks will always be trades at their fair value on exchanges, therefore it makes nearly impossible for investors to sell at inflated prices or buying the undervalued stocks.

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