No Particular Stock Is a Better Buy Than Any Other

question 9

Multiple Choice

No particular stock is a better buy than any other stock if

• A)stock prices are driven by investors' "animal spirits."
• B)the random-walk theory of stock prices is incorrect.
• C)the efficient markets hypothesis is correct.
• D)actively managed mutual funds always outperform index funds.

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Definitions:

Trend

The prevailing trend or the way in which something is evolving or transforming with the passage of time.

Process Distribution

The spread of all possible outcomes of a process, often shown in a statistical or probability distribution.

Type II Error

The error made in statistical testing when a false null hypothesis is not rejected, indicating a missed opportunity to find a true effect.

Sample Size

The number of observations or data points collected in a sample, which is a subset of the larger population.