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:

Inductive Reasoning

A logical process in which multiple premises, all believed true or found true most of the time, are combined to obtain a specific conclusion.

Heuristics

Mental shortcuts or rules of thumb that simplify decision making, often leading to a quick but imprecise solution.

Ponzo Illusion

An optical illusion where parallel lines appear to converge, demonstrating how context influences perceptual size evaluation.

Social Contract Theory

A theory in political philosophy that posits the legitimacy of the authority of the state over the individual is grounded in a hypothetical contract between them.