Which of the following statements about efficient capital markets is FALSE?
A)An efficient capital market is one in which market prices fully reflect all information available to the public.
B)There are no underpriced securities in an efficient capital market.
C)In an efficient capital market,an inactive portfolio approach to investments is an appropriate investment strategy for most investors.
D)In an efficient capital market,if a company changes to an accounting method that increases net income,the company's market price will increase.

Question

Quizplus · Accepted Answer

In an efficient capital market, all available information, including changes in accounting methods, is already reflected in the stock price. Therefore, simply changing accounting methods to increase net income would not necessarily lead to an increase in the company's market price.

Which of the Following Statements About Efficient Capital Markets Is