The Efficient Market Hypothesis Says That on Average Managers Will

question 5

Multiple Choice

The efficient market hypothesis says that on average managers will:

• A)tend to earn below average rates of returns.
• B)not be able to earn an excess return.
• C)outperform investors with inside information.
• D)tend to outperform most market participants.
• E)earn the same rate of return over time regardless of the risk assumed.

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Definitions:

Contribution Margin Ratio

A ratio that measures the difference between the sales and the variable costs of a product or service, as a percentage of sales.

Cement Manufacturer

A business involved in the production and sale of cement, a key ingredient in concrete.

Margin Of Safety

The difference between the actual or expected profitability of a project and the break-even point, often used as a risk assessment measure.

Contribution Format

An income statement format that separates fixed and variable costs, highlighting the contribution margin.