If market participants have rational expectations,
A) they can assume the stock prices they observe represent the fundamental values of those stocks
B) they know to purchase stocks that are priced below their fundamental value
C) they will achieve higher returns than those with adaptive expectations
D) they can earn above-average returns on their investments
A
You might also like to view...
The money-creation multiplier is the
A) same as the income-determination multiplier. B) amount by which the money supply would rise with a $1 increase in the supply of high-powered money. C) amount by which the money supply of high-powered money will increase equilibrium GDP. D) amount by which a $1 increase in reserves would raise an individual bank's deposit liabilities.
Suppose you purchase a two-year bond that has a $450 coupon and a face value of $5,000, and immediately after you purchase the bond, new bonds are issued that are otherwise identical, except they have coupons of $375
If you sell your bond, the price of your bond will be A) $4,868.07. B) $5,000.00. C) $5,069.76. D) $5,134.67.
Countries with a large GDP must also have a large per-capita GDP
Indicate whether the statement is true or false
Suppose that a powerplant is given a permit to pollute 10 tons of carbon into the atmosphere. As the powerplant operates, it can generate $200 of profit selling electricity per ton of carbon that it sends into the atmosphere. If the price of the carbon permit is $300 per ton, then:
A. the powerplant is better off shutting down and selling its permit. B. the powerplant is better off buying more permits and selling more electricity. C. the powerplant is better off selling electricity and using the permits to pollute 10 tons of carbon. D. the powerplant is better off shutting down and buying more permits.