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:

Divided Attention

The mental ability to process multiple sources of information simultaneously or switch focus among varying stimuli.

Attention Switching

The process of shifting focus from one task or stimulus to another, which plays a vital role in cognitive flexibility and multitasking abilities.

Automatic Task

A task performed with little or no conscious effort or control, often because it has been practiced to the point of automatization.

Dictation Practice

An educational activity involving the speaking of words or sentences for someone else to write down, aimed at improving writing, typing, or language learning skills.