Markets Are Efficient When Prices Adjust Rapidly to New Information

question 11

True/False

Markets are efficient when prices adjust rapidly to new information, continuous markets exist, and large dollar trades can be absorbed without large price movements.

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Definitions:

Cash Inflows

Money received by a business from its operations, investments, or financing activities.

Discount Factor

A multiplier used to calculate the present value of future cash flows; reflects the time value of money.

Invested Today

Refers to the allocation of resources, such as capital or time, in the present with the expectation of future returns.

Guaranteed Rate

An interest rate or return that is promised by a lender or issuer to an investor for a fixed period.