The Efficient Markets Hypothesis States That

question 46

Multiple Choice

The efficient markets hypothesis states that:

• A) the price of assets already reflects all publicly available information.
• B) arbitrage is impossible in financial markets.
• C) in financial markets both buyers and sellers will be equally informed.
• D) financial markets are, on average, more efficient than product markets.

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Definitions:

Economic Profit

The difference between a business's total revenue and its total costs, including both explicit and implicit costs.

Long-Run Supply Curve

A graphical representation showing the relationship between price and quantity supplied over time, factoring in adjustments in factors of production.

Constant-Cost Industry

Industry whose long-run supply curve is horizontal.

Long-Run Supply

A market's supply at a point where all inputs can be adjusted, considering factors like technology and resource availability, reflecting the time period in which firms can fully adjust to market conditions.