(I)The market price of a security at a given time is the highest value any investor puts on the security.
(II)Superior information about a security increases its value by reducing its risk.

Question

Quizplus · Accepted Answer

(I) is false because the market price of a security reflects the consensus value among all investors, not just the highest value an investor is willing to pay. (II) is true because superior information can indeed reduce uncertainty about a security's future performance, thereby reducing its perceived risk and potentially increasing its value.

(I)The Market Price of a Security at a Given Time