According to the eﬃcient market hypothesis, ﬁnancial markets ﬂuctuate daily because they:
A)are ineﬃcient.
B)slowly react to new information.
C)are continually reacting to new information.
D)offer tremendous arbitrage opportunities.
E)only reﬂect historical information.

Question

Quizplus · Accepted Answer

According to the efficient market hypothesis, financial markets are continually reacting to new information, which causes daily fluctuations. This means that new information is quickly incorporated into asset prices, making it difficult for investors to consistently outperform the market.

According to the Eﬃcient Market Hypothesis, ﬁNancial Markets ﬂUctuate Daily