Which of the Following Statements Is Most Correct in an Efficient

question 40

Multiple Choice

Which of the following statements is most correct in an efficient perfect market?

• A)The best predictor of tomorrow's stock price is its price today plus a tiny drift.
• B)The best predictor of tomorrow's stock price is its price today plus or minus about 1%.
• C)The best predictor of tomorrow's stock price is its price today.
• D)The best predictor of tomorrow's stock price is its price today minus any transaction costs.

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Definitions:

Costly Temptations

Expenses incurred from yielding to desires that can lead to negative financial consequences.

Repeated Mistakes

The act of making the same errors multiple times, often hindering progress or learning in any context.

Neoclassical Economics

Neoclassical economics is a school of thought that emphasizes rationality, market equilibrium, and the efficiency of markets in allocating resources.

Rational

Behaviors and decisions that maximize a person’s chances of achieving his or her goals.