Security Markets Are Efficient EXCEPT for When Which of the Following

question 13

Multiple Choice

Security markets are efficient EXCEPT for when which of the following exists?

• A) Security prices follow the leading indicators such as the DJIA very closely.
• B) The markets absorb large dollar amounts of stock without destabilizing the price.
• C) Prices adjust rapidly to new information.
• D) There is a continuous market where each successive trade is made at a price close to the previous trade.

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Definitions:

Mental Processes

Mental processes involve the internal, cognitive operations that underlie all human thought, behavior, emotions, and experiences.

Maximize Utility

An economic principle where individuals or firms attempt to obtain the highest possible satisfaction or benefit from their resources and choices.

Decision Making

The cognitive process of selecting a course of action from multiple alternatives.

Economist

A professional who studies, teaches, or practices economics, the science concerned with the production, distribution, and consumption of goods and services.