For This Question,assume That There Is Perfect Arbitrage in the Stock

question 42

Multiple Choice

For this question,assume that there is perfect arbitrage in the stock market.Given this assumption,economists believe that

• A)movements in stock prices can be easily predicted.
• B)movements in stock prices are largely unpredictable.
• C)most stocks will diverge from their fundamental value.
• D)stocks will generally earn a lower rate of return than bonds.
• E) the rate of return on stocks will be equal to the rate of return on bonds.

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