Asked by
Jasmine Gallea
on Nov 07, 2024Verified
Which of the following is implied by the evidence regarding market efficiency?
A) Prices in well-organized capital markets are unfair.
B) There is a simple way to identify mispriced stocks when they exist.
C) Prices don't respond rapidly to new information.
D) It is difficult to predict future price movements based on public information.
E) Insiders cannot make money from their private information.
Market Efficiency
A theory stating that all available information is already reflected in asset prices, thus making it impossible to consistently achieve higher returns.
Capital Markets
Markets where individuals and institutions trade financial securities, such as stocks and bonds, facilitating the raising of capital for long-term investments.
Predict Future Price Movements
The process of using analytical or statistical methods to estimate the direction of prices of assets in the future.
- Recognize the significance and challenges of predicting stock prices in efficient markets.
Verified Answer
EC
Learning Objectives
- Recognize the significance and challenges of predicting stock prices in efficient markets.