When Maurice Kendall Examined the Patterns of Stock Returns in 1953

question 64

Multiple Choice

When Maurice Kendall examined the patterns of stock returns in 1953, he concluded that the stock market was __________. Now, these random price movements are believed to be _________.

• A) inefficient; the effect of a well-functioning market
• B) efficient; the effect of an inefficient market
• C) inefficient; the effect of an inefficient market
• D) efficient; the effect of a well-functioning market
• E) irrational; even more irrational than before

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Definitions:

NPV

Net Present Value, a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Interest Rate

The cost of borrowing money or the payment received for deposit funds, usually expressed as an annual percentage of the principal.

Wine Barrels

Standardized wooden or metal barrels used for aging, storing, and transporting wine.