Behavioral finance suggests that investors react to new information in an efficient manner such that security prices accurately reflect the new information.

Question

Quizplus · Accepted Answer

Behavioral finance suggests that psychological influences and biases affect the financial behaviors of investors and can lead to irrational decision-making, implying that investors do not always react to new information in an efficient manner, and as a result, security prices may not accurately reflect all available information.

Behavioral Finance Suggests That Investors React to New Information in an Efficient