If the market is efficient, stock prices should only be expected to react to new information that is released.

Question

Quizplus · Accepted Answer

The efficient market hypothesis suggests that stock prices always reflect all relevant information and therefore only react to new information that is released. In an efficient market, it is not possible to consistently earn abnormal profits through technical or fundamental analysis as all available information is already reflected in the stock price.

If the Market Is Efficient, Stock Prices Should Only Be