Which of the Following Is a Misconception of Market Efficiency

question 14

Multiple Choice

Which of the following is a misconception of market efficiency?

• A) prices are set in a random fashion
• B) expected return implies actual return
• C) investors will perform equally
• D) all of the above

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Definitions:

Interest Rates

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.