Which one of the following best describes the current understanding of market efficiency?
A) short-term stock price movements are easy to predict
B) markets overreact to unanticipated events in a manner which can be used to earn excess returns
C) the market appears to be highly inefficient
D) short-term market movements are difficult, if not impossible, to predict accurately
E) markets tend to react slowly to unanticipated announcements

Question

Quizplus · Accepted Answer

The current understanding of market efficiency is that short-term market movements are difficult, if not impossible, to predict accurately. This is because markets quickly and efficiently incorporate all available information into stock prices, making it challenging for investors to consistently outperform the market.

Which One of the Following Best Describes the Current Understanding