Which of the Following Is an Assumption of the CMT

question 32

Multiple Choice

Which of the following is an assumption of the CMT?

• A)Single investors can affect the market by their buying and selling decisions.
• B)There is no inflation.
• C)Investors prefer capital gains over dividends.
• D)Different investors have different probability distributions..

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Definitions:

Annual Rate of Appreciation

The rate at which an investment or real estate increases in value over a one-year period, expressed as a percentage.

Quarterly Compounded

Refers to the process of calculating and adding interest to the principal amount of an investment or loan on a quarterly basis.

Nominal Rate

The stated or advertised interest rate on a loan or investment, not accounting for any compounding of interest within that period.

Quarterly Compounded

Quarterly compounded means that interest is calculated and added to the principal sum every quarter (three months), leading to growth in the investment or loan amount.