The Word "Efficient" in the Term "Efficient Markets Hypothesis" Refers

question 30

Multiple Choice

The word "efficient" in the term "efficient markets hypothesis" refers to the idea that

• A)fundamental analysis is an efficient way to go about choosing which stocks to buy or sell.
• B)stock prices move upward and downward "efficiently," rather than following a "random walk."
• C)the stock market is "informationally efficient."
• D)companies employ officers and managers who are well-qualified to perform their jobs.

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Definitions:

Government Securities

Financial instruments issued by the government to finance its expenditures, including bonds, bills, and notes.

Checkable Deposits

are bank account balances that can be readily accessed and used for payments or withdrawals via checks, debit cards, or electronic transfers.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Required Reserve Ratio

A mandated reserve that banks must keep on hand, usually a percentage of their deposits, determined by the central bank to ensure financial stability.