Which One of the Following Statements Is Correct Concerning Market

question 58

Multiple Choice

Which one of the following statements is correct concerning market efficiency?

• A) Real asset markets are more efficient than financial markets.
• B) If a market is efficient, arbitrage opportunities should be common.
• C) In an efficient market, some market participants will have an advantage over others.
• D) A firm will generally receive a fair price when it sells shares of stock.
• E) New information will gradually be reflected in a stock's price to avoid any sudden change in the price of the stock.

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Definitions:

Flashbulb Theory

A theory suggesting that the memory for the circumstances in which one first learned of a very surprising and emotionally arousing event is vivid and detailed, as if a photo was taken.

Arousal Theory

A theory in psychology that suggests there is an optimal level of arousal for each individual that leads to the best performance on tasks; too little or too much arousal can decrease performance.

Equipotentiality Theory

The concept that various parts of the brain can take over the functions of other parts if those parts are damaged.

Effortful Processing

A type of information processing that requires a significant amount of attention and conscious effort in order to encode information into memory.