In an Efficient Market, Ignoring Taxes and Time Value

question 41

Multiple Choice

In an efficient market, ignoring taxes and time value:

• A) the price of stock should decrease by the amount of the dividend immediately on declaration date.
• B) the price of stock should decrease by the amount of the dividend immediately on ex-dividend date.
• C) the price of stock should increase by the amount of the dividend immediately on declaration date.
• D) the price of stock should increase by the amount of the dividend immediately on ex-dividend date.

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Definitions:

External Locus

External locus of control refers to the belief that one's life events are largely controlled by external forces or other people rather than one's own efforts.

Life Expectancy

The average period that a person may expect to live, based on statistical averages.

Mindfulness Meditation

A practice of mindfulness involving focusing the mind on the present moment without judgment, often used as a stress reduction technique.

Optimism

The tendency to expect the best possible outcome or to dwell on the most hopeful aspects of a situation.