Question

Do you believe in the Efficient Market Hypothesis? An alternative, but very much related, question might be whether you believe that active management can produce superior investment returns to a passive management strategy. Take a stance on this and try to support it by looking at 1-2 anomalies and/or predictable patterns of future investment returns. Be careful with the timeframes you select and whether or not the anomaly / pattern was eventually arbitraged out… And keep in mind that EMH only applies to publicly traded common stock.

Guidelines

The paper should be no more than two pages of text.

[analytical support always makes for a better argument…]

You should also have 1-3 reference sources.

Answer 1

Yes we do believe in efficient market hypothesis as it guides us about the market conditions, wither we should invest in the market or not. efficient market makes investment returns high and motivates investors and producers to invest more which increases capital flow in the economy.

The active management can produce superior investment returns because it keeps close eye on the changes occurring in the market and market conditions, interest rate, people choices etc.