If the Financial Markets Are Efficient Then

question 19

Multiple Choice

If the financial markets are efficient then:

• A)stock prices should remain constant.
• B)stock prices should increase or decrease slowly as new events are analyzed and the information is absorbed by the markets.
• C)an increase in the value of one security should be offset by a decrease in the value of another security.
• D)stock prices will change only when an event actually occurs, not at the time the event is anticipated.
• E)stock prices should respond only to unexpected news and events.

---

Definitions:

Incentive Program

A plan designed to motivate and reward employees to exceed performance objectives through benefits, rewards, or recognition.

Bonus

An additional payment or reward given to an employee, often as recognition for good work or achievement.

Leadership Context

The situational environment or circumstances in which leadership is exercised, including organizational, social, cultural, and economic factors that influence leadership practices.

Individual Influences

The unique personal factors, such as personality, values, and experiences, that affect an individual's behavior and decisions.