Which of the following is implied by the evidence regarding market eﬃciency?
A) Prices in well-organized capital markets are unfair.
B) There is a simple way to identify mispriced stocks when they exist.
C) Prices don't respond rapidly to new information.
D) It is diﬃcult to predict future price movements based on public information.
E) Insiders cannot make money from their private information.

Question

Quizplus · Accepted Answer

The evidence regarding market efficiency implies that it is difficult to predict future price movements based on public information. This suggests that prices quickly and accurately incorporate all public information, making it difficult for investors to gain an advantage by trading on such information. This is consistent with the efficient market hypothesis, which suggests that any information that is publicly available is already priced into the market. The other options (A, B, C, and E) are not implied by the evidence regarding market efficiency.

Which of the Following Is Implied by the Evidence Regarding