Asked by Jaden Jackson on May 21, 2024
Verified
Which of the following is correct concerning stock market irrationality?
A) Speculative bubbles could arise, in part, because the price that people pay for stock depends on what they think someone else will pay for it in the future.
B) Economists almost all agree that the evidence for stock market irrationality is convincing and the departures from rational pricing are important.
C) Some evidence for the existence of market irrationality is that informed and presumably rational managers of mutual funds generally beat the market.
D) The value of the stock depends only on the stream of future dividend payments.
Stock Market Irrationality
The phenomenon of stock prices being influenced by emotional, psychological, or unrelated economic factors, contradicting efficient market theory.
Speculative Bubbles
A situation in financial markets where the price of assets rises significantly over its fundamental value, driven by exuberant market behavior.
Rational Pricing
A financial theory stating that asset prices will reflect all available information and respond rationally to changing conditions.
- Understand speculative bubbles and market irrationality.
Verified Answer
Learning Objectives
- Understand speculative bubbles and market irrationality.
Related questions
When the Price of an Asset Rises Above What Appears ...
News Reports from the Western United States Occasionally Report Incidents ...
Which Famous Economist Suggested That Asset Bubbles Arise Naturally as ...
After the Bubble in Housing Prices in 2008 Burst, We ...
Which of the Following Is(are)the Characteristics of a Bubble ...