Which of the Following Statements Is True of Rational Expectations

question 96

Multiple Choice

Which of the following statements is true of rational expectations?

• A)Rational expectations forecasts are always correct.
• B)For a trader with rational expectations, the expectation of an asset's price equals the optimal price forecast.
• C)If traders have rational expectations, any announcement by a company will have an effect on its stock price, even if the market was already aware of the facts being announced.
• D)If a trader really has rational expectations, he or she was always earn a greater than normal return on his or her financial portfolio.

---

Definitions:

REM Sleep

A phase of sleep characterized by rapid eye movements, during which most dreaming occurs, and brain activity is comparable to that of wakefulness.

Slow-Wave Sleep

A deep stage of sleep characterized by low frequency and high amplitude brain waves, essential for physical recovery and memory consolidation.

Sexual Content

Material that depicts or describes sexual activities or themes, often considered explicit or adult in nature, and can be subject to censorship or age restrictions.

Romantic Comedy

A genre of film that combines elements of humor and love, focusing on the development of a romantic relationship.