If the Market Is Efficient, Stock Prices Should Be Expected

question 99

True/False

If the market is efficient, stock prices should be expected to react only to new information that is released.

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Definitions:

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded, often considered the market-clearing price.

Equilibrium Quantity

The quantity of goods supplied is equal to the quantity demanded at the market equilibrium price.

Normal Good

A good for which demand increases when consumer income rises, and falls when consumer income decreases, all other factors being constant.

Demand Curve

A graphical representation that shows the relationship between the price of a good and the quantity demanded by consumers.