There has been an observed tendency for the market to _____ to news, causing, for instance, a stock to fall dramatically, then _____ .
A) under react, fall further
B) overreact, fall further
C) overreact, climb
D) overreact, stay steady

Question

Quizplus · Accepted Answer

The correct answer is C) overreact, climb. This is because markets often overreact to news, causing a sharp decline in a stock's price, followed by a recovery as the market corrects itself and the stock price climbs back up.

There Has Been an Observed Tendency for the Market to _____