The Number and Availability of Discount Brokers Has Grown Rapidly

question 15

Multiple Choice

The number and availability of discount brokers has grown rapidly since the mid-1970s. The efficient markets hypothesis predicts that people who use discount brokers

• A)will likely earn lower returns than those who use full-service brokers.
• B)will likely earn about the same as those who use full-service brokers,but will net more after brokerage commissions.
• C)are going against evidence suggesting that full-service brokers can help outperform the market.
• D)are likely to outperform the market by a wide margin.

---

Definitions:

Market-Clearing Level

Market-Clearing Level is the price point at which the quantity of goods supplied is equal to the quantity of goods demanded, eliminating any surplus or shortage in the market.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price over a specific period.

Quantity Demanded

The aggregate quantity of a product or service that buyers are prepared and capable of buying at a certain price point.

Equilibrium Price

The cost at which the amount of a product or service that consumers want to buy matches the amount that producers are willing to sell, creating a balanced market situation.