The efficient markets hypothesis implies that prices in the stock market
A)follow a definite pattern.
B)are more likely to go up than down.
C)always undervalue the true assets of a corporation.
D)are unpredictable.

Question

Quizplus · Accepted Answer

The efficient markets hypothesis suggests that stock prices reflect all available information and are therefore unpredictable. The hypothesis asserts that it is impossible to consistently achieve returns that are higher than the average market returns, as stock prices already reflect all publicly available information about a stock. Therefore, the correct answer is D - stock prices are unpredictable.

The Efficient Markets Hypothesis Implies That Prices in the Stock