When new information becomes available in the market,evidence generally suggests that:
A) insiders will be the only investors to gain.
B) it takes at least ten trading days for stock prices to adjust.
C) stock prices will adjust to the information rapidly.
D) transaction costs will erase any benefit of trading on the information.

Question

Quizplus · Accepted Answer

Stock prices will adjust to the information rapidly. Studies have shown that new information is quickly incorporated into stock prices within a few days, as investors react to the news and adjust their trading accordingly. This means that there is little opportunity for investors to profit from acting on the information after the initial adjustment period.

When New Information Becomes Available in the Market,evidence Generally Suggests