Single choice8)The Efficient Market Theory (EMT) can be applied to:Only stocks and bondsOnly mutual funds and ETFsAll types of financial securities

Break Down the Problem

1. Identify the core concept: Understand what Efficient Market Theory (EMT) is and its applicability.
2. Identify the options: Analyze the given options to see which ones EMT applies to.

Relevant Concepts

1. Efficient Market Theory (EMT): EMT posits that all available information is already reflected in the prices of securities, making it impossible to consistently achieve higher returns than the average market returns on a risk-adjusted basis.

Analysis and Detail

1. Only stocks and bonds: EMT applies broadly beyond just stocks and bonds; this option is too limiting.
2. Only mutual funds and ETFs: Similar to the first option, EMT is not restricted to mutual funds and ETFs alone.
3. All types of financial securities: EMT can be applied to stocks, bonds, derivatives, and other financial securities as long as they are traded in an efficient market.

Verify and Summarize

• The concept of EMT indeed encompasses all financial securities, as long as market conditions meet the criteria of efficiency. Therefore, the most inclusive option is the correct one.

Final Answer

All types of financial securities