Individuals who continually monitor the financial markets seeking mispriced securities:
A)earn excess profits over the long-term.
B)make the markets increasingly more efficient.
C)are never able to find a security that is temporarily mispriced.
D)are overwhelmingly successful in earning abnormal profits.
E)are always quite successful using only historical price information as their basis of evaluation.

Question

Quizplus · Accepted Answer

The continuous monitoring and search for mispriced securities by individuals will lead to the correction of these mispricings, making the markets more efficient. As a result, it becomes increasingly difficult to consistently earn excess profits through such strategies.

Individuals Who Continually Monitor the Financial Markets Seeking Mispriced Securities