Stock prices that are stable over time ________.
A) indicate that prices are useful indicators of true economic value
B) indicate that the market is not incorporating new information into current stock prices
C) ensure that an economy allocates its resources efficiently
D) indicates that returns follow a random-walk process

Question

Quizplus · Accepted Answer

If stock prices are stable over time, it means that the market is not reflecting new information or changes in economic conditions that may affect the value of the stocks. This suggests that the market is not fully efficient in incorporating all available information into stock prices. Thus, choice B is the best answer. The other choices are either unrelated or incorrect.

Stock Prices That Are Stable Over Time ________