The Concept of Market Efficiency Embodies the Idea That

question 13

Multiple Choice

The concept of market efficiency embodies the idea that:

• A)investors want to be compensated with higher returns for all the unsystematic risk they bear,and expect prices to adjust in an instantaneous and unbiased way.
• B)all investors are fully informed about the potential returns for a given firm,and therefore the share price is a fair representation.
• C)share prices respond to new information in a way that is both unbiased and instantaneous.
• D)because holders of debt do not share in the high returns in good economic periods,they require a higher rate of return relative to the risk they bear.

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Definitions:

Quantum Change

Significant, radical transformation or shift in an individual's perspective, often unexpectedly or quickly.

Employee Involvement

The degree to which employees are encouraged to contribute ideas and participate in decisions that affect their work and the organization.

Ethical

Ethical pertains to the principles of right and wrong that guide individual conduct and the decision-making process within an entity.

Dreaming

A mental activity that occurs during sleep, consisting of vivid imagery, thoughts, or sensations.