Which Statement Regarding the Efficient Markets Hypothesis Is True

question 1

Multiple Choice

Which statement regarding the Efficient Markets Hypothesis is true?

• A) The Efficient Markets Hypothesis suggests that the market does not price stocks fairly; hence, managers should make decisions based on the premise that firms' stocks are undervalued or overvalued.
• B) An individual who has information about past stock prices would be able to profit from this information if weak-form market efficiency exists.
• C) For the Efficient Markets Hypothesis to hold true, every individual investor must be "rational."
• D) Semistrong-form market efficiency means that stock prices reflect all public, but not necessarily all private, information.

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Definitions:

Inhalation

The process of drawing air into the lungs, a vital part of the respiratory cycle that allows for oxygen absorption into the bloodstream.

Diaphragm

Sheet of smooth muscle between the thoracic and abdominal cavities; contracts during inhalation.

Inhalation

The act of breathing in, whereby air (including oxygen) is drawn into the lungs, facilitating gas exchange with the bloodstream.

Exhalation

The process of breathing out, where carbon dioxide is expelled from the lungs.