If the Financial Markets Were Regulated Such That the Markets

question 1

Multiple Choice

If the financial markets were regulated such that the markets maintained strong form efficiency, then:

• A)insider trading laws would be unnecessary.
• B)all investors would earn equivalent rates of return.
• C)risk premiums would vanish.
• D)all investors would become arbitrage traders.
• E)securities would tend to be continually underpriced.

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Definitions:

Balance of Payments

A financial statement that summarizes a country's transactions with the rest of the world, including trade, investments, and monetary movements, over a specific time period.

Foreign Exchange Market

A global marketplace for trading national currencies against one another.

Euros

The official currency of the eurozone, which consists of 19 of the 27 European Union member states.

Credit Item

An entry that increases the balance of a firm's or individual's account in financial statements.