The Efficient Market Hypothesis

question 10

Multiple Choice

The efficient market hypothesis

• A) is based on the assumption that prices of securities fully reflect all available information.
• B) holds that the expected return on a security equals the equilibrium return.
• C) both A and B.
• D) neither A nor B.

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Definitions:

Balance Sheet Accounts

Categories in a balance sheet including assets, liabilities, and shareholders' equity, representing a company's financial position.

Real Accounts

Accounts that are not closed at the end of the accounting period, representing ongoing financial balances in assets, liabilities, and equity.

Temporary Accounts

Accounts that track revenues, expenses, and withdrawals for a specific accounting period and are closed at period end.

Miscellaneous Expense

Minor or incidental expenses that do not fit into standard categories and are not material to the business's overall financial results.