Mary Talked to Several Stockbrokers and Made the Following Conclusions

question 330

Multiple Choice

Mary talked to several stockbrokers and made the following conclusions. Which, if any, of her conclusions are correct?

• A)It is relatively easy to reduce firm-specific risk by increasing the number of companies one holds stock in.
• B)Stock prices, even if not exactly a random walk, are very close to it.
• C)Some people have made a lot of money in the stock market by using insider information, but these cases are not contrary to the efficient markets hypothesis.
• D)All of Mary's conclusions are correct.

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Definitions:

Decentralized System

An organizational or technological system where decision-making power and control are distributed away from a central authority.

Bureaucratic Structure

An organizational structure characterized by formal procedures, hierarchy, and clear division of labor.

Authority-And-Responsibility

Concerns the distribution of tasks and the accompanying expectation of accountabilities within an organization, ensuring that individuals have the rights and obligations to execute their roles.

Scalar Principle

An organizational principle that outlines a clear and direct line of authority in the hierarchy from the top of the organization to the lowest level.