A theory which states that assets are traded at price equal to its intrinsic value is classified as___________________?
Correct answer: B. Efficient market hypothesis
- A. Efficient money hypothesis
- B. Efficient market hypothesis
- C. Inefficient market hypothesis
- D. Inefficient money hypothesis
Explanation
The efficient market hypothesis holds that security prices reflect available information and tend to equal their intrinsic or fair values. The money hypotheses are not standard classifications in finance.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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