In an Efficient Market,it Is Believed by Some Individuals That

question 36

Multiple Choice

In an efficient market,it is believed by some individuals that the actions of traders who constantly buy and sell on any perceived market mispricings will in effect cause market prices to correctly reflect asset values.A person who believes that the actions of these traders will not result in correctly valued prices are most apt to believe in which one of the following?

• A)gambler's fallacy
• B)limits to arbitrage
• C)availability bias
• D)false consensus
• E)clustering illusion

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Definitions:

Value Chain

A sequence of activities that a company performs to design, produce, market, deliver, and support its products.

R&D

Research and Development, which refers to the activities companies undertake to innovate and introduce new products or services.

Product Design

The process of creating a new product to be sold by a business to its customers, focusing on specifications, functionality, and appearance.

Period Cost

Expenses that are not directly tied to production activity and are instead associated with a specific time period, like rent or utilities.