If markets are strong-form efficient,then event studies should show that new information affects a related stock's price
A)for a single day.
B)only when the new information relates to a dividend payment.
C)over a range of days with the overreactions exactly offsetting the underreactions.
D)only if the information is company specific.
E)by a very minimal amount,if any.

Question

Quizplus · Accepted Answer

If markets are strong-form efficient, then all available information, including insider information, is already reflected in stock prices. As a result, new information should only affect the stock price for a single day before being fully incorporated into the market's price. Therefore, choice A is the best option.

If Markets Are Strong-Form Efficient,then Event Studies Should Show That