The Market Price of a Stock Tends to Fluctuate Throughout

question 36

Multiple Choice

The market price of a stock tends to fluctuate throughout every trading day.This fluctuation is:

• A)inconsistent with the semistrong form of the efficient market hypothesis because prices should be stable.
• B)inconsistent with the weak form of the efficient market hypothesis because all past information should already be included in the price.
• C)consistent with the semistrong form of the efficient market hypothesis because daily prices should adjust as new information becomes available.
• D)consistent with the strong form of market efficiency because prices are controlled by insiders.
• E)a strong indicator that abnormal profits can be realized.

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Definitions:

General Adaptation Syndrome

According to Hans Selye, a series of physiological reactions to stress occurring in three phases: alarm, resistance, and exhaustion.

Resistance Phase

The second stage of the general adaptation syndrome, where the body adapts to and resists stress, but at a high cost to its energy resources.

Exhaustion Phase

The final stage of the general adaptation syndrome, characterized by the body's inability to continue adaptation to stress, leading to potential burnout or health issues.

Alarm Phase

The initial reaction of the body to stress, activating the sympathetic nervous system and the release of stress hormones.