According to the Efficient Market Hypothesis

question 56

Multiple Choice

According to the efficient market hypothesis

• A) one cannot expect to earn an abnormally high return by purchasing a security.
• B) information in newspapers and in the published reports of financial analysts is already reflected in market prices.
• C) unexploited profit opportunities abound, thereby explaining why so many people get rich by trading securities.
• D) all of the above are true.
• E) only A and B of the above are true.

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Definitions:

Heuristic

An educated guess based on prior experiences that helps narrow down the possible solutions for a problem. Also known as a “rule of thumb.”

Means-End Strategy

A problem-solving technique that involves identifying the end goal and then finding the means or steps to reach that goal.

Prototype

An example of a concept that closely matches the defining characteristics of the concept.

Vehicle

A means of transporting goods or individuals from one location to another, such as cars, bikes, and buses.