Investors tend to trade on their beliefs rather than on pure facts. This statement might explain why securities markets have ________ that the efficient market hypothesis does not predict.

Question

Quizplus · Accepted Answer

The efficient market hypothesis (EMH) predicts that all available information is immediately reflected in a stock's price, leading to minimal trading volume. However, if investors are trading based on their beliefs rather than pure facts, they may engage in more trading activity, leading to a larger trading volume than predicted by the EMH.

Investors Tend to Trade on Their Beliefs Rather Than on Pure