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:

Hypothetical Propositions

Statements or propositions that are based on assumptions or hypothesis rather than on concrete evidence.

Formal Operations

A stage in Jean Piaget's theory of cognitive development where individuals gain the ability to think abstractly, logically, and systematically, typically beginning in adolescence.

Ability

The possession of the means or skill to do something or perform a task effectively.

Private Speech

Vocal communication that individuals direct to themselves, often used as a tool for thought processing and problem-solving, particularly in children.