mutual fund managers can consistently beat the market average A) AlI B) No ) Rel

Question

mutual fund managers can consistently beat the market average A) AlI B) No ) Relatively many D) Relatively few 2. (Figure Supply and Demand Price $10 9 8 6 5 3 2 0 1 2 3 4 5 678 9 10 11 12 Quantity If the government places a tax on sellers of $0.67 per unit in this market, who will bear the burden of the tax? A) Sellers will pay 100 percent of the tax in the form of lower prices B) The tax will be split 50-50 between sellers and buyers C) Buyers will pay the majority of the tax. D) Sellers will pay the majority of the tax.

Explanation / Answer

1. The correct answer is: B)

Reason: According to the efficient market hypothesis, markets are efficient in the sense that all the information is incorporated in the share price prevailing in the market and no fundamental or technical analysis can constantly beat the market.

2. The Correct answer is: B)

Reason: since both the demand and supply are elastic, the tax burden will be equally shared by both the buyers and sellers.

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