if the market changes and stock prices instantly and fully reflect new information, which time path does such a change exhibit? multiple choice question. an overreaction and correction an efficient market reaction a delayed reaction

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26-10-2022
Business

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if the market changes and stock prices instantly and fully reflect new information, which time path does such a change exhibit? multiple choice question. an overreaction and correction an efficient market reaction a delayed reaction

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Qwclear Qwclear · Answer 1 · 2022-10-29T04:48:21-04:00

The time path which such a change will exhibit will be an efficient market reaction that is option B.

An efficient market reaction may be defined as the condition in which whenever a change or whenever a new information comes into the market then its effect can be seen on the price of stocks and after this the returns will not be as expected. This can further be explained with the help of Efficient Market Hypothesis which states that markets are efficient in their working, and they have no room for making excess profits with the help of investments as these investments are already distributed among different stakeholders. The stocks purchased in market depend upon the risks of market. If any day at any time, there is a change in stock market then the shares of a particular company may go up or down depending on the stock market.

Learn more about Efficient Market Hypothesis at:

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