Which one of the following is the most likely reason why a stock price might not react at all on the day that new information related to the stock's issuer is released? Assume the market is semistrong form efficient.
A) Company insiders were aware of the information prior to the announcement.
B) Investors do not pay attention to daily news.
C) Investors tend to overreact.
D) The news was positive.
E) The information was expected.

Question

Quizplus · Accepted Answer

If the information was already expected, then the market has already priced it in and there would not be much of a reaction on the day of the announcement. This is a common reason why a stock price may not react to new information in an efficient market.

Which One of the Following Is the Most Likely Reason