According to the Efficient Markets Hypothesis

question 66

Multiple Choice

According to the efficient markets hypothesis,

• A)the equilibrium price of an asset equals the optimal forecast of fundamental value based on available information.
• B)the actual and expected prices of an asset will be equal.
• C)the actual price of an asset reflects only information on past returns on the asset.
• D)the expected price of an asset incorporates only information on past returns on the asset.

---

Definitions:

Net Cash From Operating Activity

Net cash from operating activity indicates the amount of cash a company generates from its regular business operations, after accounting for operating expenses and working capital changes.

Depreciation Expense

An accounting method used to allocate the cost of a tangible or physical asset over its useful life, reflecting the asset's consumption, wear and tear over time.

Accounts Payable

Liabilities of a company or an individual due to creditors for goods and services received but not yet paid for.

Earnings Per Share

A measure of a company's profitability that is calculated by dividing its net earnings available to common shareholders by the average outstanding shares.