Explanation:
The stock market does not react to the new information regarding the discovery of huge oil reserves by the company. It takes time for the market to digest the new information. In such markets, active investment management will take advantage of this and thus beat the market hence resulting in excess returns.
Ultimate access to all questions.
![Graph showing Price (P) on y-axis and Time (t) on x-axis, with a curve rising and leveling off, labeled "Public Information" with an arrow pointing to the curve.]
An investment management firm situated in country A promises a return in excess of the market return. Select the most appropriate statement:
A
Returns will not exceed the market return.
B
Active management may indeed result in excess return.
C
Passive management may indeed result in excess return.
D
None of the above.
No comments yet.