If Capital Markets Are Efficient, Then ______________

question 320

Multiple Choice

If capital markets are efficient, then ______________.

• A) there is no reason to believe that prices are too high or too low
• B) it is possible to profit regularly from publicly available information
• C) prices will adjust slowly when reacting to new information
• D) it is not possible to make money by playing the stock market
• E) historical price trends will give you a good idea of where prices are headed in the future

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Definitions:

Errors

Errors are mistakes or inaccuracies that occur in financial statements or other business documents, often necessitating corrections.

Debits

The left side of an accounting ledger where increases in expenses, assets, or decreases in liabilities and equities are recorded.

Credits

Entries in the accounting system that represent an increase in liabilities or equity or a reduction in assets, commonly associated with income and receipts.

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts or funds obtained from special financing sources.