Which two options best describe how new information is incorporated into share prices in an efficient market?
A) Rapidly
B) Rationally
C) Through official channels
D) Gradually

Question

Quizplus · Accepted Answer

In an efficient market, new information is incorporated into share prices rapidly and rationally. This means that as soon as information becomes available, it is taken into account by investors and reflected in the share price. The market is able to process and interpret information quickly and make adjustments accordingly, leading to efficient pricing. There is no requirement for the information to come through official channels, and the speed at which the market adjusts to new information can vary depending on the nature and significance of the information. However, the overall trend is towards rapid and rational adjustment of share prices in response to new information.

Which Two Options Best Describe How New Information Is Incorporated