According to the efficient-market hypothesis, changes in stock prices are:
A)driven by irrational waves of optimism.
B)driven by irrational waves of pessimism.
C)rational reflections of underlying economic fundamentals.
D)possible to predict from available information.

Question

Quizplus · Accepted Answer

The efficient-market hypothesis suggests that changes in stock prices are rational reflections of underlying economic fundamentals. Therefore, stock prices reflect all available information, making it difficult to predict future changes based on past information. The theory implies that it is impossible to consistently outperform the market with information that is already available to everyone.

According to the Efficient-Market Hypothesis, Changes in Stock Prices Are