The Efficient Markets Hypothesis Implies That

question 67

Multiple Choice

The efficient markets hypothesis implies that

• A)building a portfolio based on a published list of the "most respected" companies is likely to produce a better-than-average return.
• B)if a stock rose in price last year,it is likely to rise in price this year.
• C)managed mutual funds should generally outperform indexed mutual funds.
• D)None of the above are correct.

---

Definitions:

Par Value

A nominal value assigned to share of stock in the charter of a corporation, often used in the calculation of capital accounts.

Stated Value

A nominal value assigned to no-par-value stock by the corporation's board of directors to serve as the base figure for the accounting of the stock.

Stockholders' Equity

The residual interest in the assets of a corporation after debts have been deducted, representing the ownership interest of the shareholders.