The Strong Form of the Efficient Market Hypothesis States That

question 115

Multiple Choice

The strong form of the efficient market hypothesis states that

• A) past price data is positively correlated to future prices.
• B) prices reflect all public information.
• C) all information both public and private is immediately reflected in stock prices.
• D) none of the other answers are correct

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much revenue is contributing to fixed expenses and net income.

Variable Costing

An accounting method that only considers variable costs (costs that vary with the level of output) when calculating the cost of goods sold and production.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a unit of product.

Net Operating Income

Represents the difference between operating revenues and operating expenses.