Which of the Following Statements Is Correct

question 78

Multiple Choice

Which of the following statements is correct?

• A) A stock is said to be in equilibrium when investors at the margin think its expected rate of return is equal to its required rate of return.
• B) According to the Efficient Markets Hypothesis,stock prices are best predicted by use of sophisticated statistical techniques such as regression analysis.
• C) The more efficient markets are,in an EMH sense,the easier it is for sophisticated investors to profit by analyzing data that companies have released to the public.
• D) The more efficient markets are,in an EMH sense,the more dangerous it would be for an investor to pick stocks at random as opposed to picking them on the basis of a careful analysis.
• E) The EMH would predict that one can "beat the market" by analyzing publicly available data,if the analyst is efficient.

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Definitions:

Interest Banks

Financial institutions that primarily engage in dealings with interest rates, offering services such as saving accounts and loans.

Maturity

The state at which an entity, such as a financial instrument or product, has fully developed or reached its maximum potential.

Interest

The cost of borrowing money, often expressed as a percentage of the amount borrowed.

Positive Covenant

Positive covenant refers to stipulations in financial contracts that require the borrower to perform specific actions, such as maintaining certain financial ratios or insurance levels.