Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 27 - Part IX - The Basic Tools of Finance - Questions for Review - Page 581: 6

Answer

The efficient market hypothesis hints that stocks prices are a reflection of various factors that make it difficult to predict future changes in stock prices. This is seen as index funds actually do better sometimes than mutual funds that are managed by experts.

Work Step by Step

This question asks you to understand the concept volatility in the market and the fluctuations of stock prices. Conceptually this can be seen as the unpredictability of the stock market.
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.