A market decline of 23% on a day when there is no significant macroeconomic event ______ consistent with the EMH because ________.
A)would be, it was a clear response to macroeconomic news
B)would be, it was not a clear response to macroeconomic news
C)would not be, it was a clear response to macroeconomic news
D)would not be, it was not a clear response to macroeconomic news
E)none of the above

Question

Quizplus · Accepted Answer

The EMH suggests that all available information is reflected in the current stock price and sudden market declines without significant macroeconomic events suggest new information has been released that has not yet been reflected in prices. Therefore, if there is no obvious macroeconomic news, a market decline of such magnitude is not consistent with the EMH.

A Market Decline of 23% on a Day When There