According to the Efficient Market Hypothesis

question 6

Multiple Choice

According to the efficient market hypothesis

• A)changes in the prices of stocks are predictable.Evidence shows that managed funds typically do better than indexed funds.
• B)changes in the prices of stocks are predictable.Evidence shows that indexed funds typically do better than managed funds.
• C)changes in the prices of stocks are not predictable.Evidence shows that managed funds typically do better than indexed funds.
• D)changes in the prices of stocks are not predictable.Evidence shows that indexed funds typically do better than managed funds.

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Definitions:

Prime Rate

The interest rate that commercial banks charge their most creditworthy customers, usually large corporations.

Repayment Schedule

A detailed plan of the amounts and timing of payments to be made on a loan.

Loan

An amount of money lent out that is to be returned with a specified interest.

T-Bill

Treasury Bill, a short-term government security issued at a discount from the face value and pays no interest before it matures.