The Efficient Markets Hypothesis Implies That Future Changes in Exchange

question 76

Multiple Choice

The efficient markets hypothesis implies that future changes in exchange rates should for all practical purposes be

• A)unpredictable.
• B)set by each country.
• C)increasing.
• D)pegged to a standard such as the U.S. dollar or the Euro.

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Definitions:

Abnormal Return

A term in finance that refers to the difference between an actual investment return and the expected return, based on the asset's risk and market movements.

Fourth Quarter Earnings

The financial performance of a company in the final quarter of its fiscal year, often used as an indicator of annual performance.

Beta

A financial metric that measures the volatility of a stock or portfolio in comparison to the market as a whole.

Annualized Return

The geometric average amount of money earned by an investment each year over a given time period, often used to compare the performance of investments with different time horizons.