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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Definitions:

Archaea

A realm comprising unicellular organisms that are genetically different from bacteria and eukaryotes, typically inhabiting harsh environments.

Bacteria

Unicellular microorganisms that can be found in various environments, often involved in processes like fermentation, decomposition, and nitrogen fixation.

Dynamic Planet

A concept that highlights Earth’s constantly changing nature, driven by internal and external forces leading to climatic shifts, geological transformations, and biological evolution.

Solid Plates

Completely durable and rigid materials or objects; in geology, it could refer to the large sections of the Earth's lithosphere.