It Is Believed by Some Individuals That, in an Efficient

question 48

Multiple Choice

It is believed by some individuals that, in an efficient market, the actions of traders who constantly buy and sell on any perceived market mispricing will in effect cause market prices to correctly reflect asset values. A person who believes that the actions of these traders will not result in correctly valued prices are most apt to believe in which one of the following?

• A) Gambler's fallacy
• B) Limits to arbitrage
• C) Availability bias
• D) False consensus
• E) Clustering illusion

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