If Security Markets Are Efficient,then

question 5

Multiple Choice

If security markets are efficient,then:

• A)the net present value of all securities should be zero.
• B)the net present value of all securities should be negative.
• C)the net present value of all securities should be positive.
• D)there are no implications on the net present value of securities.

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Definitions:

Reactive

Characterized by actions taken in response to external situations or events rather than initiating change proactively.

Competition Driven

A market situation where businesses are highly motivated to outperform their rivals in order to gain greater market share and customer loyalty.

Competitive Advantages

Attributes or circumstances that allow a company or country to produce goods or services at a lower price or in a more desirable manner than competitors.

Previously Introduced

Refers to items or concepts that have been mentioned or brought to attention earlier in a discussion or document.