When Maurice Kendall examined the patterns of stock returns in 1953, he concluded that the stock market was __________. Now, these random price movements are believed to be _________.
A) inefficient; the effect of a well-functioning market
B) efficient; the effect of an inefficient market
C) inefficient; the effect of an inefficient market
D) efficient; the effect of a well-functioning market
E) irrational; even more irrational than before

Question

Quizplus · Accepted Answer

Maurice Kendall's examination led him to conclude that stock market movements were seemingly random, which suggested the market was efficient, as prices reflected all known information. This randomness is now often interpreted as a sign of a well-functioning market, where prices adjust quickly to new information.

When Maurice Kendall Examined the Patterns of Stock Returns in 1953