If the Efficient Market Hypothesis Holds, Investors Should Expect

question 21

Multiple Choice

If the efficient market hypothesis holds, investors should expect:

• A)to earn only a normal return.
• B)to receive a fair price for their securities.
• C)to always be able to pick stocks that will outperform the market averages.
• D)Both A and B.
• E)Both B and C.

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Definitions:

Extraversion

A personality trait characterized by outgoingness, sociability, and a high level of activity.

Narcissism

A personality trait characterized by an inflated sense of self-importance, a deep need for admiration, and a lack of empathy for others.

Neuroticism

A characteristic defining a person who frequently experiences feelings of emotional unpredictability, restlessness, irritability, apprehension, and melancholy.

Maturity Principle

The theory that individuals tend to become more emotionally stable and socially mature as they age.