In an Efficient Market,the Price of a Security Will

question 21

Multiple Choice

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

• A)react immediately to 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)always rise immediately upon the release of 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:

Securities And Exchange Commission

A U.S. government agency responsible for regulating the securities markets and protecting investors.

Net Income

The amount of money a company earns after deducting all its expenses, taxes, and costs from its total revenue.

Cash Flow From Operating Activities

A measure of the cash generated or used by a company in a given period for its core business activities.

Operating Activities

Activities that relate to the primary operations of the company, such as selling products or services.