Consider the Efficient Markets Hypothesis. Carefully describe how new information about market assets gets "priced" in.

2. Name at least two potential sources of relevant new information about a stock. (.25)
4. Describe how investors react when they learn information that they believe is not yet priced into a stock. (Assume the information indicates that future benefits of owning the stock will be lower than previously expected) (.25)
6. Describe how the stock price is expected to react to the actions of the above investors. (.25)
8. Describe how the above process relates to the overall efficiency of a market. (.25)

Answer rating: 100% (QA)

The Efficient Markets Hypothesis EMH posits that asset prices fully reflect all available informatio... View the full answer