If major traders believe the price of a stock should be higher than its current market price

Question

Quizplus · Accepted Answer

If major traders believe the price of a stock should be higher than its current market price, they will likely buy the stock, which will increase the demand and eventually result in the information they possess being incorporated into the price of the stock. Selling the stock (option A) would likely lead to a decrease in the price, which would go against their belief that the price should be higher. Government regulation (option C) may limit their ability to act in certain ways, but it is unlikely that it would prevent them from buying the stock. Petitioning the Securities and Exchange Commission (option D) is also unlikely to have much of an impact, as they do not typically intervene to adjust the price of a stock.

If Major Traders Believe the Price of a Stock Should