The Efficient Markets Hypothesis Suggests That If an Unexploited Profit

question 5

Multiple Choice

The efficient markets hypothesis suggests that if an unexploited profit opportunity arises in an efficient market,

• A) it will tend to go unnoticed for some time.
• B) it will be quickly eliminated.
• C) financial analysts are your best source of this information.
• D) prices will reflect the unexploited profit opportunity.

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Definitions:

Unemployment

The state of being without a job despite actively looking for work, measured as a percentage of the labor force.

Normative Economics

Normative economics deals with the evaluation of economic outcomes through the prism of what ought to be, recommending actions by what is deemed desirable or ideal.

Macroeconomics

The branch of economics that studies overall economic dynamics, including inflation, unemployment, and economic growth, on a national or global scale.

Rate of Unemployment

The proportion of people in the labor force who are unemployed and actively seeking work.