Which of the Following Is Correct Regarding the Forms of Market

question 21

Multiple Choice

Which of the following is correct regarding the forms of market efficiency?
I. In an efficient capital market stock prices provide an unbiased estimate of the true value of an enterprise.
II. In an efficient capital market, stock prices reflect a present value of the firm's expected cash flows.

• A) Only statement I is correct
• B) Only statement II is correct
• C) Both statements I and II are correct
• D) Neither statement I nor II is correct

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Definitions:

Behavioral Economists

Scholars who study the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.

Faulty Heuristics

Incorrect or misleading cognitive shortcuts that are used to make decisions or solve problems.

Neurons

Specialized cells within the nervous system that transmit information through electrical and chemical signals.

Visual Information

Data or knowledge that can be received and processed visually, often via illustrations, graphs, images, or video.