Which of the following is a correct statement of the efficient markets theory of stock price movements?

Question

Quizplus · Accepted Answer

The efficient markets theory states that if the stock market is efficient, stock prices will display an unpredictable, random path, therefore choice C is the correct option. Option A is incorrect as it implies that the only reason for unpredictable fluctuations is irrational behavior by investors. Option B is incorrect as volatility does not necessarily imply market efficiency. Option D is incorrect as the efficient markets theory suggests that predicting future share prices is unlikely, let alone possible. Option E is incorrect as it suggests that economic fundamentals are the main determinant of stock price fluctuations, which is not supported by the efficient markets theory.

Which of the Following Is a Correct Statement of the Efficient