In an efficient market, prices appear to move randomly because
A) investors do not process new information correctly.
B) only new information affects stock prices.
C) insider trading has an unpredictable effect on stock prices.
D) the number of investors who can forecast prices correctly is too small to have any effect.

Question

Quizplus · Accepted Answer

In an efficient market, prices reflect all available information. Therefore, only new information, which is unpredictable, can affect stock prices, leading to what appears to be random price movements.

In an Efficient Market, Prices Appear to Move Randomly Because