Final answer:
Active investing aims to beat the average market rate of return, but it is difficult to consistently outperform the market. Financial professionals find it challenging to pick stocks that will outperform the market, and historical data shows that many mutual funds underperform the market average.
Step-by-step explanation:
Active investing aims to beat the average market rate of return. However, it is nearly impossible to consistently outperform the market in the long run because no one has proven to consistently 'outsmart' the market. This is why the statement 'Active investing aims to beat the average market rate of return is true.'
When stocks follow a random walk, even financial professionals find it challenging to consistently choose stocks that will outperform the market. In fact, if we look at historical data, we find that the majority of mutual funds that tried to pick stocks that would perform better than the market average actually ended up performing worse.
Therefore, active investors should be aware of the risks involved in trying to consistently beat the market and should carefully consider their investment strategies.