If in an Efficient Market All Prices Are Correct and Reflect

question 76

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:

Young Adulthood

a life stage occurring from approximately the late teens to the early thirties, focusing on personal and professional development.

Postconventional

A stage in Kohlberg's theory of moral development where moral reasoning is based on universal ethical principles and abstract reasoning.

Moral Development

The process by which individuals learn to distinguish right from wrong, developing beliefs, values, and behaviors that guide responsible decision-making.

Cognitive Awareness

The recognition and understanding of one's own mental processes, including thoughts, feelings, and perceptions.