Which of the Following Is the Best Statement of the Efficient

question 43

Multiple Choice

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

• A) Investors with information that a stock had a positive net present value (NPV) will buy it, while investors with information that a stock had a negative net present value (NPV) will sell it.
• B) Investor's decisions are dependent on complete current information of a firm's cash flows and accurate predictions of future cash flows.
• 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:

Fresco

A technique of mural painting executed upon freshly laid lime plaster, allowing the paint to become an integral part of the wall.

Lion Gate

The main entrance of the Bronze Age citadel of Mycenae in Greece, famous for its relief sculpture of two lions standing on either side of a column.

Post And Lintel

An architectural system involving the use of two upright posts supporting a horizontal beam or lintel, found in many ancient structures.

Tholos Tombs

Beehive-shaped burial structures made of stone, found in the Mycenaean civilization, used for royal or noble interments.