Which of the following is/are true about the Efficient Markets Hypothesis (EMH) (I) The rate of return on a stock is equal to the expected return (II) Stocks are fairly valued (III) Stocks are always in equilibrium (IV) It's impossible for an investor who does not have inside information to constantly "beat the market" (a) I and II only (b) II and IV only
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Which of the following is/are true about the
(I) The
(II) Stocks are fairly valued
(III) Stocks are always in equilibrium
(IV) It's impossible for an investor who does not have inside information to constantly "beat the market"
(a) I and II only
(b) II and IV only
(c) I only
(d) all of the above
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