The Efficient Markets Hypothesis Predicts That an Investor

question 105

Multiple Choice

The efficient markets hypothesis predicts that an investor

• A) will not be able consistently to earn above-normal profits from buying or selling stocks.
• B) will be able consistently to earn above-normal profits from buying or selling stocks so long as he or she makes use of rational expectations.
• C) will be able consistently to earn above-normal profits from buying or selling stocks so long as he makes use of adaptive expectations.
• D) will be able consistently to earn above-normal profits so long as stock prices in general are rising.

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Definitions:

Histogram

A graphical display of data using bars of different heights to represent the frequency of numerical data intervals.

Bin Width

The size of intervals in a histogram or bar chart, determining the range of values each bin or bar represents.

Lower Bin Limit

The minimum value within a bin or interval in frequency distribution or histogram.

Histogram

A visual chart that categorizes a collection of data points into specified intervals, indicating how often data appears within those intervals.