An Efficient Market Implies _________________________

question 115

Multiple Choice

An efficient market implies _________________________.

• A) that, on average, all investments have a negative NPV
• B) that, on average, all investments have a zero NPV
• C) that, on average, all investments have a positive NPV
• D) that there tend to be more positive NPV investments than negative NPV investments
• E) Nothing about the NPV of an investment

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Definitions:

Direct Materials

Raw materials that can be directly traced to the production of a specific product and are an integral part of the finished product.

Transportation Out

Transportation out refers to the costs associated with delivering goods from a seller to a buyer, often recognized as a selling expense.

Product Cost

The total expense incurred to produce and deliver a product, including direct materials, labor, and overhead.

Period Cost

A type of expense that is not directly tied to the production process and is expensed in the period it is incurred.