Podcast
Questions and Answers
Which of the following components reflects the speed at which new information is incorporated into prices in an efficient market?
Which of the following components reflects the speed at which new information is incorporated into prices in an efficient market?
- Stock prices
- Informational efficiency (correct)
- Market rationality
- Expected returns
What happens to prices in an efficient market when new information is incorporated into them?
What happens to prices in an efficient market when new information is incorporated into them?
- Prices decrease
- Prices remain constant
- Prices increase (correct)
- Prices become unpredictable
Why are stock prices unpredictable in an efficient market?
Why are stock prices unpredictable in an efficient market?
- Prices are constant
- New information is unpredictable (correct)
- Market participants rush to trade on new information
- Information is predictable
Fill in the blank statement
Fill in the blank statement
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Answer
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Fill in the blank statement
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Answer
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Fill in the blank statement
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Answer
Efficiency is composed of two components, one of which is ______ efficiency.
Efficiency is composed of two components, one of which is ______ efficiency.
In an efficient market, new information is incorporated into prices in an ______ and unbiased manner.
In an efficient market, new information is incorporated into prices in an ______ and unbiased manner.
A forecast about favorable future performance leads to favorable current performance, as market participants rush to trade on new information until expected returns are exactly commensurate with ______.
A forecast about favorable future performance leads to favorable current performance, as market participants rush to trade on new information until expected returns are exactly commensurate with ______.
