Tests of the Efficient Market Hypothesis (EMH)are Sometimes Based on Examining

question 70

Multiple Choice

Tests of the efficient market hypothesis (EMH) are sometimes based on examining its abnormal rate of return.The abnormal rate of return is calculated by:

• A) Subtracting the expected rate of return from the actual return, where the expected return is based on the stock's beta and the CAPM.
• B) Subtracting the actual rate of return from the expected return, where the expected return is based on the stock's beta and the CAPM .
• C) Subtracting the expected rate of return from the actual return, where the expected return is based on the stock's projected dividend yields .
• D) Subtracting the expected rate of return from the actual return, where the expected return is based on the stock's projected dividend yields.
• E) None of the above

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Definitions:

Directors

Members of a company's board responsible for making strategic decisions and ensuring the company's compliance with legal and ethical standards.

Business Decisions

The choices made by individuals or groups in regard to the operation, management, and strategy of a business.

Special Interest Group

An organization or group that advocates for specific issues or causes, often aiming to influence public policy or opinion.

Stakeholder

An individual or group that has an interest or concern in an organization or project, and whose input or involvement can affect or be affected by the outcome.