Which of the Following Is the Best Statement of the 'Efficient

question 8

Multiple Choice

Which of the following is the best statement of the 'efficient markets hypothesis'?

• A)Investor's decisions are dependent on complete current information of a firm's cash flows and accurate predictions of future cash flows.
• B)Investors with information that a share has a positive net present value (NPV)will buy it, while investors with information that a share has a negative net present value (NPV)will sell it.
• C)Competition between investors works to make the net present value (NPV)of all trading opportunities zero.
• D)A share's price is the aggregate of the information of many investors.

---

Definitions:

Autonomous

The capacity to make an informed, uncoerced decision independently.

Moral Development

The growth of an individual's understanding of right and wrong, including the formation of ethical and moral beliefs throughout life.

Piaget

A Swiss psychologist known for his pioneering work on children's cognitive development, proposing stages through which children progress as they grow.

Kohlberg

Referring to Lawrence Kohlberg, a psychologist known for his theory of moral development which is based on the concept of moral reasoning.