If market participants have rational expectations, then the best forecast of the price of a stock in the next period is
A) equal to an average of the prices of the stock in previous periods.
B) equal to the price of the stock in the current period.
C) dependent upon all information available in the current period, including, but not limited to, the price of the stock in the current period.
D) dependent on information available in the previous period.
B
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Since classical economists and monetarists believe that the economy operates at full employment along the vertical segment of aggregate supply,:
A. any increase in the money supply can only end up raising the price level. B. any increase in the money supply can only end up lowering the price level. C. any decrease in the money supply can only end up raising the price level. D. changes in the money supply will not affect the price level.
Ricky and Anita are 10 year-olds who have a lemonade stand on a busy beach and would like to practice price discrimination. They know that they are the only sellers of lemonade on the beach and that adults have a less elastic demand for lemonade than kids so they decide to sell their lemonade for $0.25 to kids and $0.50 to adults. Will their price discrimination be successful? Why or why not?
A. Yes, they have all of the necessary criteria to successfully price discriminate. B. Yes, the only necessary conditions is that they know the relative elasticities of the market segments. C. No, the kids who buy their lemonade can practice arbitrage. D. No, Ricky and Anita are price takers.