The Idea That Any Public Information You Will Be Able

question 244

Multiple Choice

The idea that any public information you will be able to find will prove of little value to you when buying and selling stocks, because that information is so quickly incorporated into the trading prices of stocks, is known as the

• A) theory of efficient markets.
• B) theory of fundamental analysis.
• C) principle of context.
• D) over-the-counter hypothesis.

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Definitions:

Market Risk Premium

Market risk premium refers to the additional return expected by investors for holding a risky market portfolio instead of risk-free assets.

Required Returns

Required Returns are the minimum expected returns on an investment that investors demand, considering the risk level of the investment relative to the risk-free rate.

Betas

Measures the volatility of a stock or portfolio in relation to the overall market, indicating the level of risk associated with the investment.

Diversifiable Risk

A type of investment risk that can be reduced or eliminated in a portfolio through diversification, unlike systemic risk.