The Efficient Markets Hypothesis Implies

question 11

Multiple Choice

The efficient markets hypothesis implies

• A)that all stocks are fairly valued all the time and that no stock is a better buy than any other.
• B)that all stocks are fairly valued all the time,but that some stocks may be better buys than other.
• C)that some stocks may be better buys than others and stock experts can determine which ones.
• D)that no stock is efficiently valued.

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Definitions:

Horizontal Equity

A principle of taxation asserting that taxpayers with similar income or ability to pay should be taxed at the same rate.

Vertical Equity

Refers to the principle that individuals who are more capable of paying taxes should contribute more to the tax system, ensuring a fairer distribution based on ability to pay.

Tax System

The structured method by which a government or authority levies taxes on individuals, businesses, and transactions.

U.S. Economy

The economic system of the United States, characterized by a mixture of private and public enterprise and known for being one of the world’s largest and most complex economies.