In an Efficient Market,the Expected Abnormal Return on a Security

question 27

Multiple Choice

In an efficient market,the expected abnormal return on a security is:

• A)equal to zero.
• B)equal to the risk-free rate of return.
• C)equal to the security's required return.
• D)greater than the security's required return.

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Definitions:

Sensory Adaptation

A process whereby sensory receptors grow less responsive to stimuli that do not vary with time.

Absolute Threshold

The minimum intensity of a stimulus that one can detect 50% of the time.

Sensory Overload

A condition where one or more of the body’s senses experiences over-stimulation from the environment.

Sensory Adaptation

The process by which sensory receptors change their sensitivity to a stimulus, usually diminishing response to a constant stimulus over time.