Which of the following would be indicative of inefficient markets?
A)Overreaction and reversion
B)Delayed response
C)Immediate and accurate response
D)Both A and B.
E)Both A and C.

Question

Quizplus · Accepted Answer

Overreaction and reversion (Option A) indicate that the market is not fully efficient and is likely to produce returns that can't be explained by logic. Delayed response (Option B) is the result of information asymmetry and a lack of quick information dissemination. Therefore, inefficient markets will show both overreaction and reversion as well as a delayed response.

Which of the Following Would Be Indicative of Inefficient Markets