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:

Persuasive

Having the ability to convince or influence someone to believe or do something through reasoning or the use of emotive language.

"You Must"

A directive phrase indicating obligation or necessity, often used to emphasize the importance of following a command or advice.

Motivate Action

The process of stimulating interest or initiating an impulse in someone to do something or achieve a goal.

Persuasive Request

A communication aimed to influence, change the mind, or urge the receiver to take some action through convincing arguments.