On most days, you notice that stock prices fluctuate wildly. It is obvious to you that markets are inefficient during this period.

Question

Quizplus · Accepted Answer

Stock prices fluctuating wildly does not necessarily indicate market inefficiency. Price fluctuations can be a result of various factors including news, economic reports, and investor sentiment, and are a natural part of how markets operate, reflecting the continuous updating of information. Market efficiency is about how quickly and accurately prices reflect all available information, not the absence of price changes.

On Most Days, You Notice That Stock Prices Fluctuate Wildly