Which of the Following Statements About the Efficient-Market Hypothesis Is

question 25

Multiple Choice

Which of the following statements about the efficient-market hypothesis is not correct?

• A) Security prices in an efficient market rapidly respond to new information.
• B) Investors in an efficient-market are unable to earn returns greater than those commensurate with the level of risk.
• C) Good news of an entity's future prospects would lead to a decrease in demand for the entity's shares.
• D) Increased demand for shares will lead to an increase in the share price.

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Definitions:

Misperceive

To perceive incorrectly; to misunderstand or to have a mistaken interpretation of something.

Clear Thinking

The process of thinking in a clear, logical, and coherent manner, often involving critical analysis and reasoning.

Identity Theory

A view in the philosophy of mind which holds that mental states and processes are identical to brain states and processes.

Brain States

The varying physiological conditions of the brain, which can influence thoughts, emotions, and behavior.