Market efficiency says:
A) prices may not reflect underlying value.
B) a good financial manager can time stock sales.
C) managers may profitably speculate in foreign currency.
D) managers cannot boost stock prices through creative accounting.
E) None of these.

Question

Quizplus · Accepted Answer

Market efficiency suggests that stock prices reflect all available information, therefore managers cannot boost stock prices through creative accounting practices. However, it does not guarantee that prices always accurately reflect underlying value (choice A) nor does it suggest that a good financial manager can time stock sales (choice B) or profitably speculate in foreign currency (choice C).

Market Efficiency Says