Question

Arrange the following sentences in a logical order to construct a coherent paragraph.
A: Consequently, it should be impossible for investors to earn returns that beat the market, except by assuming
higher investment risk.
B: The efficient theory of financial markets states that asset prices fully reflect all available information in the market.
C: Since, according to the theory, assets are priced to perfection, investors will not be able to exploit discrepancies
between price and intrinsic value to earn abnormal profits.
D: The theory was proposed by the American economist and Nobel laureate Eugene Fama in 1970.
E: It has come under criticism lately for ignoring irrationality among investors that can cause wide gaps between
price and value for a long time.​

Answer 1

Answer:

1. B will be first
2. D will be second
3. C will be third
4. E will be forth
5. A will be fifth

Answer 2

Answer:

1. B: The efficient theory of financial markets states that asset prices fully reflect all available information in the market.

2.D: The theory was proposed by the American economist and Nobel laureate Eugene Fama in 1970.

3. E: It has come under criticism lately for ignoring irrationality among investors that can cause wide gaps between price and value for a long time.

4. C: Since, according to the theory, assets are priced to perfection, investors will not be able to exploit discrepancies between price and intrinsic value to earn abnormal profits.

5. A: Consequently, it should be impossible for investors to earn returns that beat the market, except by assuming higher investment risk.

Explanation: