According to the semistrong form of market efficiency, when new information becomes available in the market, the related stock prices will:
A) remain unchanged because they already reflect this information.
B) accurately and rapidly adjust to include this new information.
C) adjust to accurately reflect this new information over the course of the next few days.
D)most likely increase because all new information has a positive effect on stock prices.

Question

Quizplus · Accepted Answer

The semistrong form of market efficiency states that all publicly available information is reflected in stock prices, and when new information is released, stock prices will rapidly and accurately adjust to incorporate this new information. Therefore, option B is the correct answer. Options A, C, and D are incorrect because they suggest that stock prices may not quickly and accurately adjust to new information, which is inconsistent with the semistrong form of market efficiency.

According to the Semistrong Form of Market Efficiency, When New