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

---

Definitions:

Marginal Costs

Marginal Costs involve the additional expenses incurred from the production of one extra unit of a product or service.

Total Variable Cost

the sum of all costs that vary with the level of production, such as materials and labor directly involved in manufacturing.

Total Fixed Costs

The sum of all consistent, non-variable expenses a company must pay, regardless of its level of production.

Total Costs

The total of all costs associated with manufacturing goods or providing services, encompassing both fixed and variable expenses.