If the efficient markets hypothesis is true, portfolio managers should do all of the following EXCEPT:
A) |
Minimize transaction costs. | |
B) |
Spend more time working on security selection. | |
C) |
Work more with clients to better quantify their risk preferences. | |
In an efficient market all stocks are properly priced and reflect all publicly available information. Therefore, individual selection of stocks is not important the only thing that is relevant is the portfolio’s beta. |