Based on the efficient market hypothesis,a stock's abnormal return at Time t is an indicator of:
A)semistrong form inefficiency.
B)cumulative market expectations.
C)a release of information at Time t.
D)conservatism.
E)weak form inefficiency.

Question

Quizplus · Accepted Answer

According to the efficient market hypothesis, all publicly available information is already reflected in a stock's price. Therefore, any abnormal return at Time t can only occur if new information is released, which is option C. Options A, B, D, and E imply inefficiencies in the market, but the efficient market hypothesis assumes that markets are efficient and there are no opportunities for abnormal returns beyond those that may be expected by chance.

Based on the Efficient Market Hypothesis,a Stock's Abnormal Return at Time