Question

Assume that the efficient market hypothesis holds. Marcos has been recently hired by a brokerage firm and claims that he now has access to the best market information. However, he is the “new guy,” and no one at the firm tells him much about the business. Would you expect Marcos’s clients to be better or worse off than the rest of the firm’s clients?

Short answer

According to the efficient market hypothesis, the individual who knows more about the job would be able to attract better clients than the one who does not. As a result, Marcos is expected to have worse clientele than the other brokers.

Step-by-step solution

Efficiency market hypothesis : 

It relates to the belief that an investor cannot beat the market and that it is impossible for an investor to outperform the market in terms of share price since the stock price is already created on the basis of the investor's future predictions.

Explanation : 

Marcos is a new broker in the company who has recently joined and does not have the same level of knowledge and expertise as the other brokers. Marcos's clients will be worse off than other clients due to his lack of understanding about the firm's actions, just as a participant who is unfamiliar with market efficiency will not profit.

According to the efficient market hypothesis, the individual who knows more about the job would be able to attract better clients than the one who does not. As a result, Marcos is expected to have worse clientele than the other brokers.