According to the Efficient Markets Hypothesis

question 106

Multiple Choice

According to the efficient markets hypothesis

• A) common stock prices should be constant.
• B) the price of a corporation's stock is likely to fluctuate substantially in response to news about changes in the company's short-term prospects.
• C) the price of a corporation's stock will fluctuate significantly only in response to news about changes in the company's long-term prospects.
• D) price fluctuations in common stock are a response to fads and are only infrequently the result of changes in the expected profitability of the companies involved.

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Definitions:

Revenue

The income generated from normal business operations and before any expenses are deducted.

Excise Tax

A tax imposed on specific goods, services, or activities, such as gasoline, cigarettes, or gambling, usually intended to discourage their use or to raise revenue.

Luxury Boats

Expensive, high-end boats equipped with superior amenities, designed for comfort, performance, and status.

Tax Burden

The measure of the total taxes paid by an individual, corporation, or another entity relative to its income, assets, or consumption levels.