The difference between the efficient markets hypothesis and the stronger version of the efficient markets hypothesis is that
A) although both theories hold that financial prices are equal to optimal forecasts, the stronger version holds that the optimal forecast is also the fundamental value of the financial instrument.
B) the efficient markets hypothesis uses adaptive expectations while the stronger version uses rational expectations.
C) according to the efficient markets hypothesis, prices are equal to optimal values only in equilibrium, while according to the stronger version, prices are always equal to optimal values.
D) according to the efficient markets hypothesis, prices are always equal to optimal values, while according to the stronger version, prices are equal to optimal values only when markets are in equilibrium.
Correct Answer:
Verified
Q1: The _ holds that the prices of
Q2: The _ holds that the prices of
Q4: The expected return on a share of
Q5: The expected return to a newly-issued bond
Q6: The face value of the bond multiplied
Q7: The expected return on previously-issued bonds is
Q8: As long as returns among various financial
Q9: Adaptive expectations are formed by looking at
A)the
Q10: Rational expectations are formed by looking at
A)the
Q11: Which of the following are implications of
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents