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:

Strong Id

A term that might refer to an individual with a dominant id according to Freudian psychology, characterized by impulsive and unconscious desires.

Oedipus Complex

A Freudian theory positing that a child experiences unconscious desires for their opposite-sex parent and jealousy and rivalry toward their same-sex parent.

Oral Fixation

A psychological condition first described by Freud, characterized by an obsession with engaging the mouth in activities such as eating, talking, or smoking.

Reaction Formation

A defense mechanism where unacceptable impulses are transformed into their opposite, often seen in exaggerated or compulsive behaviors.