The market price of a stock moves or fluctuates daily.This fluctuation is:
A)inconsistent with the semistrong efficient market hypothesis because prices should be stable.
B)inconsistent with the weak form efficient market hypothesis because all past information should be priced in.
C)consistent with the semistrong form of the efficient market hypothesis because as new information arrives daily prices will adjust to it.
D)consistent with the strong form because prices are controlled by insiders.
E)None of the above.

Question

Quizplus · Accepted Answer

The semistrong efficient market hypothesis suggests that the market price adjusts to new information as it arrives. Therefore, the fluctuation in stock prices is consistent with the semistrong form of the hypothesis, as new information is constantly being incorporated into stock prices.

The Market Price of a Stock Moves or Fluctuates Daily