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:

Natural Gas

A fossil fuel used as a source of energy for heating, cooking, and electricity generation, consisting primarily of methane.

Supply And Demand

The fundamental economic model that explains the interaction between the quantity of a good or service that producers wish to sell and the quantity that consumers wish to buy.

Standardized Product

A product that is uniform in quality and characteristics, produced in large volumes, and by many different firms.

Determinant

A mathematical concept referring to a scalar value that can be calculated from the elements of a square matrix, often used to solve systems of linear equations.