Based on the efficient market hypothesis,a stock's abnormal return at Time t is an indicator of
A)semistrong form inefficiency.
B)cumulative market expectations.
C)a release of new information at Time t.
D)conservatism.
E)weak form inefficiency.

Question

Quizplus · Accepted Answer

The efficient market hypothesis states that all available information is already reflected in a stock's price, thus abnormal returns cannot occur without the release of new information. Therefore, a stock's abnormal return at Time t is an indicator of a release of new information at Time t, which is choice C.

Based on the Efficient Market Hypothesis,a Stock's Abnormal Return at Time