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

Question

Quizplus · Accepted Answer

The semistrong form of market efficiency assumes that all publicly available information is already incorporated into stock prices. Therefore, when new information becomes available, it will be rapidly and accurately reflected in stock prices. This means that option B is the best choice, while options A and D are incorrect. Option C is partially correct in that it suggests that stock prices will adjust to reflect the new information, but it may take longer than a few days for prices to fully incorporate the new information.

According to the Semistrong Form of Market Efficiency,when New Information