Which of the Following Statements Is FALSE

question 92

Multiple Choice

Which of the following statements is FALSE?

• A)If the profit opportunities from having private information are large,other individuals will attempt to gain the expertise and devote the resources needed to acquire it.
• B)When private information is relegated to the hands of a relatively small number of investors,these investors may be able to profit by trading on their information.
• C)When a buyer seeks to buy a stock,the willingness of other parties to sell the same stock suggests that they value the stock differently.
• D)Since stock markets aggregate the information and view of many different investors,we expect the stock price to react slowly to new publicly available information as the investors continue to trade until a consensus is reached as to the new value of the stock.

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Definitions:

Take a Loss

To realize a financial loss on an investment or transaction, often as a result of selling assets for less than their purchase price.

Short Run

A period in economics during which at least one input (e.g., factory size) is fixed and cannot be changed.

Long Run

A period of time in economics during which all factors of production and outputs are variable, allowing for full adjustment to changes.

Perfect Competitor

A theoretical concept in which a market structure has many small sellers, all producing homogeneous products with no control over market price.