Which One of the Following Statements Best Defines the Efficient

question 84

Multiple Choice

Which one of the following statements best defines the efficient market hypothesis?

• A)Efficient markets limit competition.
• B)Security prices in efficient markets remain steady as new information becomes available.
• C)Mispriced securities are common in efficient markets.
• D)All securities in an efficient market are zero net present value investments.
• E)Profits are removed as a market incentive when markets become efficient.

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Definitions:

Material Equivalent Units

A concept used in process costing that converts partially completed units into an equivalent number of fully completed units.

Finishing Department

The last phase in the manufacturing process where products are completed, polished, inspected, and prepared for sale or shipment.

First-In, First-Out

An inventory valuation method where the goods first purchased or produced are the first ones sold, assuming that older inventory is used up first.

Equivalent Units

A concept in cost accounting used to allocate costs to mass-produced items that are not identical, allowing for the calculation of per-unit costs at various stages of production.