The Efficient Markets Hypothesis Implies That

question 67

Multiple Choice

The efficient markets hypothesis implies that

• A)building a portfolio based on a published list of the "most respected" companies is likely to produce a better-than-average return.
• B)if a stock rose in price last year,it is likely to rise in price this year.
• C)managed mutual funds should generally outperform indexed mutual funds.
• D)None of the above are correct.

---

Definitions:

Dividends Distributed

The portion of a company's earnings paid out to shareholders.

Accounting Equation

The basic principle underlying accounting that asserts that Assets = Liabilities + Equity, illustrating the balance among what a company owns and owes at any point in time.

Asset Accounts

Accounts that record the resources owned or controlled by a company that have future economic value.

Journal Entry

An accounting transaction recorded in a company's financial records, which includes a description, the accounts affected, and the amounts debited and credited.