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:

Direct Information

Data or facts received straight from the source without any intermediaries or alterations.

Core Characteristics Model

A framework used to identify and describe the main attributes or features of an object or concept.

Job Enrichment

The process of making a job more rewarding and satisfying by adding more meaningful tasks and duties, which can enhance employee motivation and productivity.

Unenriched Jobs

Positions that offer little to no variety, challenge, or sense of accomplishment, often leading to employee dissatisfaction and lack of motivation.