If You Are Convinced That Stock Prices Are Impossible to Predict

question 35

Multiple Choice

If you are convinced that stock prices are impossible to predict from available information,then you probably also believe that

• A)the efficient markets hypothesis is not a correct hypothesis.
• B)the stock market is informationally efficient.
• C)the stock market is informationally inefficient.
• D)there is no reason to establish a diversified portfolio of stocks.

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Definitions:

Retains Earnings

Profits that a company chooses to re-invest in the business rather than distribute to shareholders.

Capital Intensity Ratio

The capital intensity ratio measures the amount of capital needed per dollar of revenue; a higher ratio indicates that more assets are needed to generate income.

2018 Data

Information or statistics from the year 2018, typically used for analytical or comparison purposes.