Which Statement Regarding the Efficient Markets Hypothesis Is True

question 70

Multiple Choice

Which statement regarding the efficient markets hypothesis is true?

• A) If the stock market is weak-form efficient, then one cannot outperform the market even if he or she has private information.
• B) If the stock market is semistrong-form efficient, then the expected return on stocks and bonds must be the same.
• C) If the stock market is strong-form efficient, then high beta stocks must have the same expected return as low beta stocks.
• D) Even though the Efficient Markets Hypothesis (EMH) assumes that markets behave as if all investors were rational, under the EMH it is still possible to have some irrational investors in a rational market.

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Definitions:

Methane

A simple alkane hydrocarbon with a molecular formula of CH4, known as the main component of natural gas.

Water Molecule

A water molecule consists of two hydrogen atoms bonded to one oxygen atom (H2O), fundamental for all known forms of life.

Representation

The act of depicting or the state of being depicted, often used in the context of graphics, data visualization, or symbolic systems.

Ethane

A colorless, odorless gas that is the second simplest alkane, consisting of two carbon atoms and six hydrogen atoms (C2H6), used as a fuel and a petrochemical feedstock.