The Efficient Markets Hypothesis Is Weakened by Evidence That

question 38

Multiple Choice

The efficient markets hypothesis is weakened by evidence that

• A) stock prices tend to follow a random walk.
• B) stock prices are more volatile than fluctuations in their fundamental values can explain.
• C) technical analysis does not outperform the overall market.
• D) an investment adviser's past success or failure at picking stocks does not predict his or her future performance.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overheads that are incurred in transforming materials into finished goods.

Weighted-Average Method

A costing method that calculates the cost of goods sold and ending inventory based on the average cost of all units available for sale during a period.

Process Costing

A costing method used in production where costs are assigned to processes and then averaged over all units produced.

Job-Order Costing

An accounting method that assigns costs to specific jobs or batches, used in industries where goods or services are produced on a custom basis.