In an Efficient Market,the Price of a Security Will

question 44

Multiple Choice

In an efficient market,the price of a security will:

• A) always rise immediately upon the release of new information with no further price adjustments related to that information.
• B) react to new information over a two-day period after which time no further price adjustments related to that information will occur.
• C) rise sharply when new information is first released and then decline to a new stable level by the following day.
• D) react immediately to new information with no further price adjustments related to that information.
• E) be slow to react for the first few hours after new information is released allowing time for that information to be reviewed and analyzed.

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Definitions:

Anecdotes

Short, often amusing or interesting stories about a real incident or person, typically used to illustrate a point.

Psychoanalysis

A therapeutic approach and theory of psychology developed by Sigmund Freud that emphasizes unconscious motives and conflicts.

Sigmund Freud

An Austrian neurologist known as the founding father of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychotherapist.

Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment.