The Efficient Market Hypothesis States That

question 17

Multiple Choice

The efficient market hypothesis states that:

• A) Requiring firms to issue more stock will reduce volatility.
• B) Requiring investors to hold securities longer will reduce volatility.
• C) Electing a pro-business Republican president makes the market more efficient.
• D) Taxing security returns will raise prices .
• E) Markets price securities fairly at all times and that new information is rapidly reflected in the price.

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Definitions:

Biological Clock

An internal mechanism in organisms that controls the timing of bodily functions and behaviors in a roughly 24-hour cycle.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Operant Conditioning

An educational method where behavior intensity is altered by either rewards or penalties.

Insight

The ability to gain a clear and deep understanding of a situation or concept, often leading to a breakthrough or solution.