The Efficient Market Hypothesis Rests on Which of the Following

question 29

Multiple Choice

The efficient market hypothesis rests on which of the following assumptions?
I.Information is widely available to all investors almost simultaneously.
II.Investors react quickly to new information.
III.Accounting information accurately portray a company's economic situation.
IV.Events which affect the market occur randomly.

• A) I and II only
• B) I, II and III only
• C) I, III and IV only
• D) I, II, III and IV

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Definitions:

Drawee

The entity, often a bank, on which a check or draft is drawn and is responsible for paying the amount specified.

Depositary Bank

A financial institution that holds and manages the securities of a depositor, facilitating the exchange of securities and related transactions.

Payor Bank

A bank that is responsible for paying a check or draft on behalf of its client.

UCC

Short for Uniform Commercial Code, a set of laws that provide legal rules and regulations governing commercial or business dealings and transactions in the United States.