Which of the Following Is NOT Correct with Regards to the Efficient

question 140

Multiple Choice

Which of the following is NOT correct with regards to the Efficient Markets Hypothesis?

• A) The EMH suggests that there are no positive NPV investments, on average.
• B) The EMH asserts that information has been "priced out" of stocks.
• C) The EMH refers to well-organized capital markets.
• D) The EMH suggests that the prices on the TSX are fair, on average.
• E) The EMH suggests that markets in which prices fluctuate a great deal cannot be efficient.

---

Definitions:

Per Capita Income

A measure of the average income earned per person in a specified area over a defined period of time, often used as an indicator of economic health.

WARP

Weak Axiom of Revealed Preference, a theory in economics that assumes if a consumer prefers product A over B when both are available, then they will not choose B when A is available.

Bundle

An assortment of items or services combined and offered for sale as a complete set.

Laspeyres Price Index

A measure of inflation computed by taking the ratio of the total cost of purchasing a specified basket of goods at current prices to the cost of those same goods at base-year prices.