Rational Expectations Involve the Assumption That

question 83

Multiple Choice

Rational expectations involve the assumption that

• A)market participants make use only of information on the past performance of an asset in determining what they believe its price should be.
• B)market participants rarely change their minds about the correct price of an asset.
• C)financial markets are good at increasing liquidity, but poor at transmitting information.
• D)market participants makes use of all available information.

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Definitions:

Control Chart

A tool used in statistical quality control to monitor a process and determine whether it is in a state of statistical control.

Compressive Strength

The capacity of a material or structure to withstand loads tending to reduce size, measured by the maximum stress that a material can sustain under compression.

Injection Molding

The process of producing components by forcing molten material into a mold.

Standard Deviation

A quantification of the extent to which a group of numbers deviates from their average.