If Markets Are Not Reasonably Efficient, Then

question 32

Multiple Choice

If markets are not reasonably efficient, then

• A) the estimates of expected returns are not needed.
• B) the need for a discount rate to analyze project cash flows is not needed.
• C) estimates of expected returns that were based on security prices will not be reliable.
• D) none of the above.

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Definitions:

Feedback Effects

The process where outcomes or outputs of a system loop back to influence the inputs or initial conditions, often amplifying or dampening effects in the system.

Partial Equilibrium

An analysis of equilibrium within a specific market or sector, ignoring interactions with other markets or the effects of changes in them.

General Equilibrium Analysis

An economic analysis that considers the simultaneous equilibrium of all markets in the economy.

Wheat Market

The global marketplace where wheat is bought and sold, influenced by factors such as weather conditions, political stability, and global supply and demand.