Which of the Following Statements Is Correct

question 9

Multiple Choice

Which of the following statements is correct?

• A)If the market is strong-form efficient it must also be weak-form efficient and semi-strong efficient.
• B)There is evidence to suggest that the market is strong-form efficient because corporate insiders have made extraordinary profits by trading on inside information.
• C)The Efficient Market Hypothesis states that security prices will be based on their expected return.
• D)None of these statements are correct.

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Definitions:

Inflation Rate

The enhancement of the overall price tag of goods and services in an economy throughout a specific period.

Consumer Price Index

A statistical estimate that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time, indicating the rate at which purchasing power is eroding.

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, as an indicator of inflation or deflation.