In an Efficient Market

question 17

Multiple Choice

In an efficient market

• A) all financial transactions have an NPV less than zero.
• B) the investor receives abnormal returns consistently.
• C) the investor is compensated properly for risk borne.
• D) all of the other answers are correct.

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Definitions:

Corporate Bond Rate

The interest rate paid by corporations on their issued debt securities (bonds), reflecting the cost of borrowing for the firm and the risk perceived by investors.

Credit Card Debt

The total amount of money owed by consumers that have been accrued through the use of credit cards, often bearing high interest rates.

Loanable Funds

The money available for borrowing, influenced by savings and investments, within an economy.

Interest Rates

A financial charge, calculated as a portion of the principal, assessed by a lender against a borrower for the loan of money or assets.