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:

Limited Quantities

Refers to the specified number of items available within a certain period, often influenced by production or supply constraints.

Short-Run Condition

A period in which at least one input is fixed and firms cannot fully adjust to new market conditions.

Shutting Down

A short-term decision by a firm to cease production when the market price is below variable costs, incurring losses only equal to fixed costs.

Total Revenue

The overall amount of money generated by a business from the sale of its goods or services.