Which of the Following Is Not an Assumption of the Rational

Multiple Choice

Which of the following is not an assumption of the rational expectations theory?

A) The prices of securities and interest rates reflect all available information
B) Changes in rates and security prices are correlated only with unanticipated information
C) Transactions and storage costs for securities are negligible
D) Expectations concerning future security prices and interest rates are formed rationally and efficiently
E) Unexploited opportunities for profit exist in the securities markets