No Adjustment Is Required on the Part of the Investor

question 31

Multiple Choice

No adjustment is required on the part of the investor when stock prices change in the market portfolio because

• A) the markets are semi-strong efficient.
• B) the market value is the units of the security outstanding times the historical value of the security.
• C) every security is represented in proportion to its market value relative to the market value of the risk free security.
• D) their relative market values and their proportions change together.

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Definitions:

Causal Thinking

involves understanding the cause-effect relationship between two events or situations, believing one event is the result of the occurrence of the other event.

Value Rationality

A concept in sociology and economics that refers to behavior motivated by a consistent set of ethical or ideological beliefs, as opposed to actions motivated by ends-means calculations.

Ethics

The branch of philosophy that deals with questions about morality and the principles guiding right and wrong conduct.

Affective Action

Actions motivated by feelings, emotions, or affective states rather than rational calculations or norms.