What does the efficient markets hypothesis tell us about the movement in a stock price?
A) It tells what happens to the stock price in the past but not in the future.
B) It reflects only what the buyers, not the sellers, think about the future movement of the stock price.
C) It reflects all public information that leads to its movement.
D) It always predicts how the stock price will move in the future.

Question

Quizplus · Accepted Answer

The efficient markets hypothesis asserts that the stock prices always quickly and accurately incorporate all publicly available information, such as news, financial reports, and analyst ratings, which leads to its movement. Therefore, option C is the correct answer.

Answer: A, B, D are incorrect 
 The efficient markets hypothesis doesn't provide any specific predictions on how a stock's price will move in the future because it suggests that all relevant information is already incorporated into the current stock price. Therefore, options A and D are incorrect. Moreover, the efficient market hypothesis assumes that the market participants have access to complete and accurate information, including both buyers and sellers. Hence, option B is also incorrect.

What Does the Efficient Markets Hypothesis Tell Us About the Movement