In an Efficient Market,the Price of a Security Will

question 9

Multiple Choice

In an efficient market,the price of a security will

• A)react immediately to new information with no further price adjustments related to that information.
• B)react to new information over a 2-day period after which time no further price adjustments related to that information will occur.
• C)rise sharply when new information is first released and then decline to a new stable level by the following day.
• D)always rise immediately upon the release of new information with no further price adjustments related to that information.
• E)be slow to react for the first few hours after new information is released allowing time for that information to be reviewed and analyzed.

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Definitions:

FOB Destination

A shipping term indicating that the seller bears the transportation cost and risk until the goods are delivered to the buyer's location.

Sales Discount

A sales discount is a reduction in the price of goods or services offered by a seller to a buyer, typically to encourage early payment or bulk purchases.

Perpetual Inventory

An inventory system that updates item records continuously as transactions occur.

2/10, n/30

A common credit term indicating that a buyer can take a 2% discount on the invoice price if payment is made within 10 days; otherwise, the net amount is due in 30 days.