Which of the Following Statement(s) Is/are True If the Efficient

question 53

Multiple Choice

Which of the following statement(s) is/are true if the efficient market hypothesis holds? I) It implies perfect forecasting ability
II) It implies market is irrational
III) It implies that prices follow a particular pattern
IV) It implies that prices reflect all available information

• A) I only
• B) II only
• C) I and III only
• D) IV only

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Definitions:

Price

The expected financial outlay, required, or dispensed in payment for something.

Claret

A red wine from Bordeaux, France, or a wine of similar character from elsewhere.

Demand Function

A mathematical representation of the relationship between the quantity demanded of a good and its determining factors, such as price and consumer income.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to replace more expensive items with less expensive ones.