Following the Theory of the "Efficient Market Hypothesis" All of the Following

question 136

Multiple Choice

Following the theory of the "efficient market hypothesis" all of the following are true EXCEPT

• A) securities are typically in equilibrium, meaning they are fairly priced and their expected returns equal their required returns.
• B) insider trading scandals have proven that stocks are not fully and fairly priced; as a result, it would be worthwhile for investors should spend time searching for mispriced (over- or under-valued) stocks.
• C) at any point in time, security prices fully reflect all public information available about the firm and its securities, and these prices react swiftly to new information.
• D) since stocks are fully and fairly price, it follows that investors should not waste their time trying to find and capitalize on miss-priced (under- or over-valued) securities.

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Definitions:

Equivalent Units

A concept used in cost accounting to express the amount of materials or labor in terms of fully completed units of production.

Equivalent Units

A concept in cost accounting used to express the amount of work done by incomplete units of production in terms of fully completed units.

Physical Units

A quantifiable measurement of products or goods that doesn't consider value or weight, used in inventory and production.

Process Cost Accounting

An accounting method used to assign production costs to products based on processes or departments, useful in mass production environments.