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Answer: Passive investment strategy
If securities markets are semi-strong-form efficient, active trading strategies—whether attempting to exploit price patterns (Option B) or public information (Option C)—are unlikely to generate abnormal returns. This implies that portfolio managers cannot consistently outperform the market. Consequently, a passive investment strategy (Option A) is expected to outperform active management, as it aligns with the market's efficiency and avoids the costs and risks associated with active trading.
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Over the long run, if a market is semi-strong-form efficient, which of the following investment strategies is most likely to yield the highest returns for investors?
A
Passive investment strategy
B
Active trading strategy aimed at exploiting price patterns
C
Active trading strategy aimed at exploiting public information