Assume the Securities Markets Are Strong Form Efficient

question 22

Multiple Choice

Assume the securities markets are strong form efficient.Given this assumption, you should expect which one of the following to occur?

• A)The risk premium on any security in that market will be zero.
• B)The price of any one security in that market will remain constant at its current level.
• C)Each security in the market will have an annual rate of return equal to the risk-free rate.
• D)The price of each security in that market will frequently fluctuate.
• E)The prices of each security will fall to zero because the net present value of the investments will be zero.

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Definitions:

Board Meeting

A formal gathering of the board of directors of an organization, company, or corporation to discuss and decide on company policy and management issues.

Liable

Being legally responsible or obligated.

Sarbanes-Oxley Act

A U.S. federal law that aims to protect investors by making corporate disclosures more reliable and accurate, enhancing financial transparency and accountability.

Audit Committee

A subcommittee of a company's board of directors responsible for overseeing financial reporting, audit processes, and compliance with laws and regulations.