According to the efficient markets hypothesis, worse-than-expected news about a corporation will
A)have no effect on its stock price.
B)raise the price of the stock.
C)lower the price of the stock.
D)change the price of the stock in a random direction.

Question

Quizplus · Accepted Answer

The efficient markets hypothesis suggests that all available information is already reflected in stock prices. Therefore, worse-than-expected news about a corporation would lead to a decrease in its stock price as the market adjusts to the new information.

According to the Efficient Markets Hypothesis, Worse-Than-Expected News About a Corporation