People Have a Strong Incentive to Form Rational Expectations Because

question 9

Multiple Choice

People have a strong incentive to form rational expectations because

• A)they are guaranteed of success in the stock market.
• B)it is costly not to do so.
• C)it is costly to do so.
• D)everyone wants to be rational.

---

Definitions:

Treasury Stock

Treasury stock is made up of shares that have been issued and subsequently bought back by the company that issued them, which decreases the number of shares available on the open market.

Common Stock

A type of equity security that represents ownership in a corporation, providing voting rights and a share in the company's profits through dividends.

Par Preferred Stock

Preferred shares issued at a stated value (par value), which typically determines the dividend payments and is considered during liquidation.

Journalize

The process of recording transactions in a journal, which includes detailing the financial transactions of a company in chronological order.