Which of the following would be indicative of inefficient markets?
A) Overreaction and reversion
B) Delayed response
C) Immediate and accurate response
D) Both Overreaction and reversion; and Delayed response
E) Both Overreaction and reversion; and Immediate and accurate response

Question

Quizplus · Accepted Answer

Inefficient markets are characterized by either overreaction and reversion or delayed response. Option A includes only overreaction and reversion, which may indicate inefficiency but not necessarily always. Option B includes only delayed response, which may also indicate inefficiency, but not exclusively. Option C, immediate and accurate response, indicates efficient markets. Thus, option D, which includes both overreaction and reversion, and delayed response, is the best choice for indicating inefficient markets.

Which of the Following Would Be Indicative of Inefficient Markets