Which of the Following Statements Is Correct

question 78

Multiple Choice

Which of the following statements is correct?

• A) A stock is said to be in equilibrium when investors at the margin think its expected rate of return is equal to its required rate of return.
• B) According to the Efficient Markets Hypothesis,stock prices are best predicted by use of sophisticated statistical techniques such as regression analysis.
• C) The more efficient markets are,in an EMH sense,the easier it is for sophisticated investors to profit by analyzing data that companies have released to the public.
• D) The more efficient markets are,in an EMH sense,the more dangerous it would be for an investor to pick stocks at random as opposed to picking them on the basis of a careful analysis.
• E) The EMH would predict that one can "beat the market" by analyzing publicly available data,if the analyst is efficient.

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Definitions:

Insurance

A financial product sold by insurance companies to safeguard against the risk of financial loss.

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as materials and labor.

Labor

Human effort, whether physical or mental, contributed to the production of goods and services.

Materials

The physical components used in the production of goods and services.