No Particular Stock Is a Better Buy Than Any Other

question 9

Multiple Choice

No particular stock is a better buy than any other stock if

• A)stock prices are driven by investors' "animal spirits."
• B)the random-walk theory of stock prices is incorrect.
• C)the efficient markets hypothesis is correct.
• D)actively managed mutual funds always outperform index funds.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the cost of the materials and labor directly used to create the product.

FIFO Costs

First In, First Out, a cost flow assumption for inventory valuation where the oldest inventory items are recorded as sold first.

FIFO Inventory

A method of inventory valuation where the first items placed into inventory are the first ones sold; stands for First-In, First-Out.

Periodic Inventory

An inventory accounting system where inventory counts and cost of goods sold (COGS) are determined at the end of an accounting period.