If Markets Are ____, Investors Could Use Available Information Ignored

question 31

Multiple Choice

If markets are ____, investors could use available information ignored by the market to earn abnormally high returns.

• A)perfect
• B)active
• C)inefficient
• D)in equilibrium

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Definitions:

Operating Costs

Operating Costs are expenses associated with the day-to-day functions of an organization, excluding direct material and labor costs.

Tax Rate

The rate at which a person or company is taxed by the state.

Profitability Index

A financial tool used to evaluate the desirability of an investment or project by dividing the present value of future cash flows by the initial investment.

Net Present Value

A calculation that determines the present value of future cash flows, discounted at a specific rate, to evaluate the profitability of an investment.