According to the efficient markets hypothesis, which of the following would decrease the price of stock in Veblen's Leisure Company?
a. Veblen announces, just as everyone had expected, that it has fired its CEO who has been accused of ethics violations.
b. Veblen announces, as the market had expected, that its profits were low.
c. Fundamental analysis published by KM Financial shows that Veblen's stock is undervalued.
d. A highly anticipated book is published by a Veblen insider which details Veblen's innovative technology in plain English, information that was previously unavailable to the public and which will now be used by Veblen's competitors.
d
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The financial institutions in our banking system are all in the business of transferring funds from savers to investors. This process is known as
A) financial intermediation. B) money laundering. C) parachuting. D) lobbying.
Of the following, the best example of private information is when
A) Michael knows the price of a gallon of milk at the minimart but Michelle doesn't know. B) you know some of your used car's defects but a potential buyer cannot find out about them until after buying. C) you don't know the quality of a used car and must hire a trained mechanic who tells you all its defects. D) you pay the owner of a used car a little extra and she lets you know all of the car's defects.
A capital gain is defined as
A) the tax paid when one sells an asset. B) the positive difference between the sale price and the purchase price of an asset. C) the tax rate one pays when one moves into a higher tax bracket. D) an unanticipated increase in income.
Economists who accept the quantity theory of money favor a monetary rule because they believe the short-run effects of monetary policy are unpredictable and the long-run effects are on the price level, not real output.
Answer the following statement true (T) or false (F)