An Efficient Market Is One in Which

question 28

Multiple Choice

An efficient market is one in which

• A) no rents are created.
• B) past prices can be used to predict the levels of future prices.
• C) the principals can fully monitor the actions of their agents.
• D) the price fully reflects all available information.

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Definitions:

Dividends

Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Journal Entries

Recorded transactions in the accounting system that show the effects of financial events on the accounts of a company.

Investment Account

An account held at a financial institution that contains securities, cash, and other investment vehicles.

Related Income

Income that arises from transactions or relationships between entities that have a special connection or are part of the same group.