Anomalies Related to the Semi-Strong Form of the Efficient Market

question 34

Multiple Choice

Anomalies related to the semi-strong form of the efficient market hypothesis indicate that:

• A)the market is truly efficient.
• B)high returns are very difficult to achieve.
• C)the market is less than perfectly efficient.
• D)public information is almost useless.

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Definitions:

Borrowing Capacity

Borrowing capacity is the maximum amount of credit a lender is willing to extend to a borrower, based on their financial strength and other factors.

Amortization

The process of spreading out a loan or intangible asset cost over a fixed period, for accounting and taxation purposes, allowing for a reduction in reported income.

Subsidiary Loss

Financial losses incurred by a subsidiary, which may impact the financial position and results of the parent company.

Deferred Tax Liability

A tax obligation due in the future for income that has been recognized in the financial statements before it is taxable.