Asked by Simran Nijjar on Jul 23, 2024
Verified
Which of the following statements about the efficient-market hypothesis is not correct?
A) Security prices in an efficient market rapidly respond to new information.
B) Investors in an efficient-market are unable to earn returns greater than those commensurate with the level of risk.
C) Good news of an entity's future prospects would lead to a decrease in demand for the entity's shares.
D) Increased demand for shares will lead to an increase in the share price.
Efficient-Market Hypothesis
The theory that all available information is already reflected in securities prices, therefore making it impossible to consistently achieve higher returns than the overall market.
Security Prices
The market price at which a financial security is traded.
Risk Level
The degree of uncertainty associated with the potential for loss or undesirable outcomes in an activity or decision.
- Elucidate the models of market efficiency and the efficient-market hypothesis, including their implications for financial reporting.
Verified Answer
Learning Objectives
- Elucidate the models of market efficiency and the efficient-market hypothesis, including their implications for financial reporting.
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