If Financial Markets Are Efficient, That

question 28

Multiple Choice

If financial markets are efficient, that
Suggests that

• A) investors cannot earn superior returns
• B) investors cannot expect to outperform the market consistently
• C) security prices are random
• D) bearing additional risk will not increase return

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Definitions:

Technological Advance

The development of new technologies and improvement of existing technologies to increase productivity or address new challenges.

Market Supply Curve

A graphical representation depicting the relationship between the price of a good and the total quantity of the good that producers are willing to supply.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a product or service, an important concept in economics for decision making.

Variable Input

An input in the production process that can be adjusted in the short term to change the level of output.