If Market Participants Rely Only on Past Stock Prices to Forecast

question 45

Multiple Choice

If market participants rely only on past stock prices to forecast future stock prices

• A) they will be better able to forecast future price increases than future price decreases.
• B) they will be better able to forecast future price decreases than future price increases.
• C) they have adaptive expectations.
• D) they have rational expectations.

---

Definitions:

Consolidation Worksheet

A tool used in preparing consolidated financial statements for a group of companies, allowing for the elimination of intercompany transactions and balances.

Income

Earnings generated from business activities over a period, often categorized as net, gross, operating, or non-operating income.

Dividends Paid

Payments made by a corporation to its shareholder members from its earnings or profits.

Fair-Value Method

An accounting approach where assets and liabilities are listed at their fair value, reflecting their current market price.