Which of the Following Statements Is False

question 8

Multiple Choice

Which of the following statements is false?

• A) If the profit opportunities from having private information are large, other individuals will attempt to gain the expertise and devote the resources needed to acquire it.
• B) When private information is relegated to the hands of a relatively small number of investors, these investors may be able to profit by trading on their information.
• C) When a buyer seeks to buy a stock, the willingness of other parties to sell the same stock suggests that they value the stock differently.
• D) Since stock markets aggregate the information and views of many different investors, we expect the stock price to react slowly to new publicly available information as the investors continue to trade until a consensus is reached as to the new value of the stock.

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Definitions:

Expected Opportunity Loss

The anticipated amount of loss associated with not choosing the best course of action.

Environmentally Safe Material

Substances or materials that do not harm the environment, including during their production, use, and disposal.

Minimum Expected Loss

A decision-making criterion based on choosing the action that has the smallest expected loss, used under uncertainty to minimize possible losses.

Payoff Table

A table that displays the possible outcomes or results of different decisions under various states of nature.