Noise traders pursue trading strategies without superior information, meaning they make decisions based on emotions or rumors rather than factual analysis or insider knowledge. This can lead to inconsistent or irrational behavior in the market, potentially distorting prices away from their true fundamental values.

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Noise Traders

Question 77

Multiple Choice

Noise traders

A) pursue trading strategies without superior information.
B) make use of inside information.
C) reduce the amount of risk in the market.
D) help to ensure that asset prices reflect the fundamental values of the securities being traded.

Correct Answer: