If in an Efficient Market All Prices Are Correct and Reflect

question 60

Multiple Choice

If in an efficient market all prices are correct and reflect market fundamentals,which of the following is a FALSE statement?

• A)A stock that has done poorly in the past is more likely to do well in the future.
• B)One investment is as good as any other because the securities' prices are correct.
• C)A security's price reflects all available information about the intrinsic value of the security.
• D)Security prices can be used by managers to assess their cost of capital accurately.

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Definitions:

Mystical Powers

Supernatural abilities or phenomena that are beyond the ordinary laws of nature and science, often attributed to magic, spiritual, or other inexplicable forces.

Vital Air

Historically, a term referring to the component of air believed to be crucial for life, often associated with oxygen.

Positive Force

An influence or factor that contributes to a beneficial outcome or fosters positive change.

Bewitchment

Refers to the act or power of causing someone to become enchanted or spellbound, often seen in folklore and witchcraft contexts.