The theory of efficient markets assumes that:
A. the prices of all financial instruments reflect all available information.
B. the best approach to determining stock prices is to follow the chartists.
C. prices of bonds, but not stocks, reflect all available information.
D. stock prices are relatively rigid because it takes a while for information to efficiently move through the market.
Answer: A
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If velocity is constant then targeting the money supply and nominal GDP is
A) effectively an interest rate target. B) effectively a real GDP target. C) effectively the same thing. D) inherently inconsistent.
Why don't governments avoid budget deficits under all circumstances?
The financial system does NOT influence
a. long-run economic growth. b. saving and investment. c. the amount of capital in the economy. d. the amount of natural resources in the economy.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease