According to the January effect,stock prices
A) experience an abnormal price rise from December to January.
B) experience an abnormal price decline from December to January.
C) follow a random walk during January.
D) set the pattern for the entire year in January.

Question

Quizplus · Accepted Answer

The January effect theory says that stock prices tend to rise in January, especially for small-cap and value stocks. This is believed to be due to investors selling stocks before the end of the year for tax purposes and then reinvesting the money in the new year. Therefore, option A is the correct choice.

According to the January Effect,stock Prices