The Efficient Market Hypothesis Implies That

question 24

Multiple Choice

The efficient market hypothesis implies that

• A)all investments should earn the same average rate of return over time.
• B)any investment should earn a normal return commensurate with the investment's risk.
• C)efficient markets will tend to have fixed prices from one day to the next.
• D)stock prices are only efficient when all investors review their portfolios on a daily basis.
• E)investors must be disinterested in their investments for the markets to be efficient.

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Definitions:

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource or factor of production.

Marginal Product

The additional output that is produced by employing one more unit of a specific input, holding other inputs constant.

Skilled Workers

Employees who have specialized training, knowledge, and experience in certain fields, making them highly valuable in the workforce.

Value Of Marginal Product

The additional revenue generated by employing one more unit of a factor, such as labor or capital.