Which of the Following Activities Would Be Most Useful in an Efficient

question 21

Multiple Choice

Which of the following activities would be most useful in an efficient market?

• A) buying and holding a diversified portfolio
• B) searching for patterns in charts based on stock price movements
• C) analyzing financial ratios based on accounting data
• D) buying only securities that have performed well in the recent past

---

Definitions:

Self-Determination Theory

The theory that people need to feel at least some degree of autonomy and internal motivation.

Error Management Theory

A theory suggesting that when making decisions under uncertainty, people are biased toward making the less costly error.

Action Identification Theory

A theory suggesting that how individuals identify and think about their actions affects how they perform and experience those actions.

Temporal Discounting

The bias towards valuing rewards received right away more than those in the future.