Mean Reversion Refers to the Observation That

question 24

Multiple Choice

Mean reversion refers to the observation that

• A) stock prices overact to news announcements.
• B) stocks prices are more volatile than fluctuations in their fundamental value would predict.
• C) stocks with low returns are likely to have high returns in the future.
• D) stocks with low returns are likely to have even lower returns in the future.

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Definitions:

Stockholder

An individual or entity that owns one or more shares of stock in a corporation, making them a partial owner of that company.

Creditor

An individual or institution to whom money is owed by a debtor, typically resulting from a provision of goods, services, or loans.

Proxy Vote

A vote cast by one person on behalf of another during shareholders' meetings, typically when the shareholder cannot attend but wants their vote on corporate matters to be counted.

Shareholders

Individuals or entities that own shares in a corporation, giving them partial ownership and entitlement to a portion of the profits.