Which of the Following Is Correct Concerning Stock Market Irrationality

question 175

Multiple Choice

Which of the following is correct concerning stock market irrationality?

• A)Speculative bubbles could arise, in part, because the price that people pay for stock depends on what they think someone else will pay for it in the future.
• B)Economists almost all agree that the evidence for stock market irrationality is convincing and the departures from rational pricing are important.
• C)Some evidence for the existence of market irrationality is that informed and presumably rational managers of mutual funds generally beat the market.
• D)The value of the stock depends only on the stream of future dividend payments.

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Definitions:

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Schedule-induced Polydipsia

An abnormal increase in drinking behavior that is observed in animals subjected to certain intermittent or unpredictable schedules of reinforcement, not directly related to the physiological demands for water.

Animal Model

A non-human animal used in scientific research to study biological processes, diseases, or behaviors that are similar to those in humans.

Human Alcoholism

A chronic condition characterized by uncontrolled drinking and preoccupation with alcohol, leading to physical dependence and various health issues.