If Market Participants Have Rational Expectations,then the Best Forecast of the Price

question 87

Multiple Choice

If market participants have rational expectations,then the best forecast of the price of a stock in the next period is

• A) equal to an average of the prices of the stock in previous periods.
• B) equal to the price of the stock in the current period.
• C) dependent upon all information available in the current period, including, but not limited to, the price of the stock in the current period.
• D) dependent on information available in the previous period.

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Definitions:

Break-even Point

The level of sales at which total revenues equal total expenses, resulting in no net profit or loss.

Sales Mix

The combination of different products or services a company sells, usually expressed in terms of the proportion of total sales volume each constitutes.

Fixed Expenses

Costs that do not change with the level of production or sales over a certain period, such as rent, salaries, and loan payments.

Total Sales

The total revenue generated from the sale of goods or services before any expenses are subtracted.