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Portfolios 502: The Efficient Market Theory

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1.
Academics have challenged the efficient market theory because _______.
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Several irregularities have been observed. Academics have noted many irregular phenomena that caused them to call the theory into question.
2.
Which market index tracks 500 of the largest US company stocks?
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Standard and Poor's. Standard and Poor's tracks 500 of the largest US company stocks.
3.
Security prices can be predicted in an efficient market.
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False. According to the theory, only new information can change prices, so predictions will not work.
4.
In an efficient market, investors are actually trading information.
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True. Since prices reflect information, in an efficient market, investors are actually trading information.
5.
Index funds attempt to _______ the market.
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Match. Index funds try only to match the market.