If the efficient-market hypothesis is true, then the idea of:

Question

Quizplus · Accepted Answer

The efficient-market hypothesis suggests that all publicly available information is immediately reflected in the stock prices. Therefore, herd instinct may not apply to the stock market because investors are already incorporating new information into stock prices. As for tulip mania, it is an example of a bubble where prices are driven up by speculation and not by fundamentals. The efficient-market hypothesis suggests that the market will quickly incorporate any new information and reflect it in the prices, preventing bubbles like tulip mania from occurring in the long run.

If the Efficient-Market Hypothesis Is True, Then the Idea Of