1. According to the "Efficient Market Hypothesis" (EMH), which of the following statements is TRUE?
Asset prices fully reflect all available information, making it impossible to consistently earn excess returns.
It is possible to consistently outperform the market using technical analysis.
Market efficiency only applies to the bond market, not the stock market.
Future stock prices can be predicted accurately based on past trends.
Explanation:
The Efficient Market Hypothesis asserts that financial markets are "informationally efficient". Since prices already reflect all known information, no investor can have an edge, and "beating the market" consistently is impossible except through luck.