Which One of the Following Statements Is Correct Concerning Market

question 44

Multiple Choice

Which one of the following statements is correct concerning market efficiency?

• A)Markets tend to be more efficient when the frequency of price changes diminishes.
• B)If a market is efficient,arbitrage opportunities should be common.
• C)In an efficient market,some market participants will have an advantage over others.
• D)A firm will generally receive a fair price when it sells newly issued shares of stock.
• E)New information will gradually be reflected in a stock's price to avoid spooking investors.

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Definitions:

Basis of Property

The basis of property is the starting point for determining the gain or loss on the sale, exchange, or other disposition of property, generally its cost plus improvements and minus depreciation.

Recognized Gain

The portion of profit from the sale of an asset that must be reported for taxation purposes.

Shareholder

An individual or institution that owns a share of a company's stock, making them a partial owner of the company.

Net Capital Loss

Occurs when total capital losses exceed total capital gains in a tax year, with limitations on its deduction against other types of income.