Which of the Following Is Consistent with the Efficient Market

question 10

Multiple Choice

Which of the following is consistent with the efficient market hypothesis?

• A)So-called value shares outperform growth shares.
• B)Shares that have performed well over the past year continue to perform well for several more months.
• C)A company announces higher than expected sales and earnings.The share price immediately increases by 10%.
• D)A company announces higher than expected sales and earnings.The share price remains unchanged.

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Definitions:

Profit Margin

A financial metric that measures the percentage of revenue remaining after all expenses have been deducted from sales.

Operating Income

Income generated from regular business operations, excluding expenses such as taxes and interest payments.

Trading Debt Securities

Buying and selling debt instruments, like bonds, in financial markets with the aim of profiting from price fluctuations.

Current Assets

Current assets are the resources a company owns that are expected to be converted into cash, sold, or consumed within a year or within the operating cycle, whichever is longer.