According to the Efficient Market Hypothesis

question 6

Multiple Choice

According to the efficient market hypothesis

• A)changes in the prices of stocks are predictable.Evidence shows that managed funds typically do better than indexed funds.
• B)changes in the prices of stocks are predictable.Evidence shows that indexed funds typically do better than managed funds.
• C)changes in the prices of stocks are not predictable.Evidence shows that managed funds typically do better than indexed funds.
• D)changes in the prices of stocks are not predictable.Evidence shows that indexed funds typically do better than managed funds.

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Definitions:

Small Stock Dividend

A dividend payment made in the form of additional shares, typically less than 25% of the existing shares.

Retained Earnings

The cumulative amount of net income kept in the company after dividends are paid and not distributed to shareholders.

Market Value

The market value at which you can buy or sell an asset or service right now.

Stock Dividend

A distribution of additional shares of a company to its shareholders, rather than paying a cash dividend.