The Efficient Market View Holds That ________

question 66

Multiple Choice

The efficient market view holds that ________.

• A) companies can search for new pieces of information to improve forecasting
• B) forward exchange rates provide the least accurate forecasts of future exchange rates
• C) companies must spend time and money collecting and examining information believed to affect future exchange rates
• D) prices of financial instruments reflect all publicly available information at any given time

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Definitions:

Disposable Income

Disposable income refers to the sum of money that families can use for expenditures and savings once income taxes are deducted.

MPS (Marginal Propensity to Save)

The proportion of an increase in income that an individual or population saves rather than spends on consumption.

APC (Average Propensity to Consume)

The fraction of income that households plan to spend on goods and services; it is the ratio of total consumption to total disposable income.

Disposable Income

Refers to the amount of money that households have available for spending and saving after income taxes have been accounted for.