If Financial Markets Are Efficient, That Suggests That

question 18

Multiple Choice

If financial markets are efficient, that suggests that

• A)investors cannot earn superior returns
• B)investors cannot expect to outperform the market consistently
• C)security prices are random
• D)bearing additional risk will not increase return

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Definitions:

Interest Rate

An interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Money Supply

The complete volume of cash and similar liquid resources present in an economy at any specific moment, covering bank deposits, cash, and easily liquidated assets.

Money Supply

Refers to the total quantity of money available in an economy at a specific time, including currency, coins, and balances held in checking and savings accounts.

Interest Rates

The expense incurred when taking out a loan, usually represented as a yearly percentage rate of the principal amount.