Overshooting occurs when:
A)You set higher targets than others
B)Someone has created a bandwagon
C)Firms overreact to rivals' aggressive behavior
D)Asset prices overreact to new information

Question

Quizplus · Accepted Answer

Overshooting refers to a situation where asset prices overreact to new information. This can lead to a spike in prices beyond their fundamental value, followed by a correction to bring them back in line. This phenomenon is more commonly associated with foreign exchange markets but can occur in various asset classes.

Overshooting Occurs When