According to the Efficient Market Hypothesis,which of the Following Statements

question 16

Multiple Choice

According to the efficient market hypothesis,which of the following statements is not correct?

• A)Stock market prices tend to rise today if they rose yesterday.
• B)As judged by the typical person in the market,all stocks are fairly valued all the time.
• C)At the market price,the number of shares being offered for sale matches the number of shares people want to buy.
• D)All of the above statements are incorrect.

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Definitions:

Profitability Index

A financial tool that calculates the relationship between the costs and benefits of a proposed project through its net present value.

Internal Rate Of Return

A metric used in capital budgeting to estimate the profitability of potential investments, calculating the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.

Discount Rate

In the realm of discounted cash flow analysis, this is the interest rate used for estimating the present value of future financial inflows.

Anticipated Annual Incremental

Expected yearly increases in revenue or benefits as a result of a particular action or investment, not considering future inflation or changes in currency value.