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.

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Definitions:

Meat Powder

A powdered form of meat used as a dietary supplement or flavoring.

Bell

A bell is a hollow instrument that produces sound when struck, traditionally made of metal and used for signaling, calling, or making music.

Conditioned Response

A response that, through repeated pairings, is evoked by a formerly neutral stimulus.

Unconditioned Response

A naturally occurring response (e.g., salivation).