Which of the Following Is Consistent with the Efficient Market

question 3

Multiple Choice

Which of the following is consistent with the efficient market hypothesis?

• A)so-called value stocks outperform growth stocks.
• B)stocks that have performed well over the past year continue to perform well for several more months.
• C)a company announces higher than expected sales and earnings.The stock price immediately increases by 10%.
• D)a company announces higher than expected sales and earnings.The stock price remains unchanged.

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Definitions:

Compensating Balance

A minimum account balance that a borrower is required to maintain with a lender, which can reduce the effective amount of loan available to the borrower.

Cash Balances

The total amount of cash in a company's account at any given time, which can be used for transactions or as a reserve.

Receivables Financing

A form of financing where a company uses its outstanding invoices or receivables as collateral to secure a loan or advance.

Administrative Fee

Charges imposed by investment funds or companies to cover operational and management expenses.