In an Efficient Market, Stocks with Similar Risks Will

question 52

Multiple Choice

In an efficient market, stocks with similar risks will:

• A)have the same market price.
• B)pay similar dividends.
• C)yield the market rate of return.
• D)produce abnormal returns.
• E)have similar rates of return.

---

Definitions:

Partnership Interest

An ownership share in a partnership that represents a partial right to its assets, income, and gains.

Outside Basis

Refers to a partner's or investor's tax basis in an individual partnership interest or investment, including the initial investment amount plus any additional contributions and adjusted by allocations of income or loss and distributions.

Inside Basis

The cost basis of an asset inside a partnership or other entity, reflecting its original cost plus adjustments.

Recognize Gain

To report the increase in value of an asset when it is sold or disposed of, for tax purposes.