Which of the following statements about the efficient-market hypothesis is not correct?
A) Security prices in an efficient market rapidly respond to new information.
B) Investors in an efficient-market are unable to earn returns greater than those commensurate with the level of risk.
C) Good news of an entity's future prospects would lead to a decrease in demand for the entity's shares.
D) Increased demand for shares will lead to an increase in the share price.

Question

Quizplus · Accepted Answer

In an efficient market, good news about an entity's future prospects would lead to an increase in demand for the entity's shares and an increase in the share price. Therefore, statement C is incorrect.

Which of the Following Statements About the Efficient-Market Hypothesis Is