You purchased shares of a company in the automotive industry a year ago.Over the course of the past year, the economy began to slow down and the company faced declining sales.As a result, the stock price declined over your holding period.Which of the following is true?

Question

Quizplus · Accepted Answer

The efficient market hypothesis (EMH) suggests that all available information is already reflected in stock prices. The decline in stock price due to a slowing economy and declining sales is a reflection of new information being incorporated into the stock price, not a violation of EMH.

You Purchased Shares of a Company in the Automotive Industry