If markets are efficient,when new information about a stock becomes available,the price will:
A) remain unchanged because it already reflects this information.
B) accurately and rapidly adjust to include this new information.
C) adjust to accurately reflect this new information over the course of the next few days.
D) most likely increase because all new information has a positive effect on stock prices.

Question

Quizplus · Accepted Answer

Efficient markets theory suggests that all available information is already reflected in stock prices. Therefore, when new information becomes available, the price will react quickly and accurately to incorporate this new information. This means that option B, "accurately and rapidly adjust to include this new information" is the best choice.

If Markets Are Efficient,when New Information About a Stock Becomes