If information does not arrive randomly and the market rapidly and accurately adjusts to any new information, stock prices will
A)follow a random walk.
B)not follow a random walk.
C)behave in a deterministic manner.
D)behave in a completely random manner.

Question

Quizplus · Accepted Answer

If the market rapidly and accurately adjusts to any new information, stock prices will not follow a random walk as they will reflect the impact of new information on the underlying company or economic conditions. Instead, prices will move in a non-random direction as investors adjust their expectations based on the new information.

If Information Does Not Arrive Randomly and the Market Rapidly