The Efficient Market Hypothesis Suggests That

question 55

Multiple Choice

The efficient market hypothesis suggests that

• A) investors should not try to outguess the market by constantly buying and selling securities.
• B) investors do better on average if they adopt a "buy and hold" strategy.
• C) buying into a mutual fund is a sensible strategy for a small investor.
• D) all of the above are sensible strategies.
• E) only A and B of the above are sensible strategies.

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Definitions:

Variable Overhead Spending Variance

The difference between the actual variable overheads incurred and the expected variable overheads based on the standard cost for the actual production level.

Standard Variable Overhead Rate

The estimated cost per unit of the variable overheads that are expected to be incurred in the production process.

Actual Total Variable Overhead Cost

The real expense incurred for variable overheads, which fluctuates with changes in production volume.