According to the Efficient Markets Hypothesis, Stock Price Changes Reflect

question 97

Multiple Choice

According to the efficient markets hypothesis, stock price changes reflect ______, but according to Keynes, stock price changes often reflect ______.

• A) the inventory accelerator; changes in Tobin's q
• B) changes in the real cost of capital; financing constraints
• C) changes in the underlying economic fundamentals; irrational waves of optimism or pessimism
• D) reductions in investment tax credits; the use of historical cost rather than replacement cost in computing depreciation costs

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Definitions:

Freud's Theory

An approach to understanding human behavior that focuses on the role of unconscious desires and conflicts as the primary drivers of human actions.

Adult Personality

Characteristics and patterns of thought, emotion, and behavior that are established during adulthood.

Ego

In Freud’s structural model, the part of personality that considers external reality while mediating between the demands of the id and the superego.

Instinctual Influences

Innate, biological drives or motivations that impact human behavior and decision-making, often operating outside of conscious awareness.