High-Frequency Trading Involves Scanning the Latest News and Stock Quotes

question 15

Multiple Choice

High-frequency trading involves scanning the latest news and stock quotes with high-tech computers and using the information to trade stocks very quickly. Because it is highly automated, it happens a thousand times faster than an eye can blink. Though each trade might make a fraction of a penny, it accounts for about two-thirds of the stock market trading. How does this financing trend reflect the efficient markets hypothesis?

• A) Computers ensure public knowledge is instantly embodied in the stock price.
• B) Buying and holding stocks allows the investor to circumvent this volatility.
• C) Investing in stocks this way has a low risk of failure, thus a low return.
• D) The firms that make a lot of money using this strategy are likely just very lucky.

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Definitions:

Advertising

A form of marketing communication used to promote or sell a product, service, or idea through various mediums, such as TV, radio, print, or online platforms.

Nonpersonal Selling

Selling tactics that do not involve face-to-face interaction with consumers, such as advertising, direct mail, and online marketing.

Discount Pricing

A strategy where products or services are sold at a reduced price to attract customers and increase sales volume.

Special Price Reductions

Discounts offered on goods or services beyond the usual pricing, often to promote sales or clear inventory.