Which one of the following best describes the current understanding of market efficiency?

The market tends to overreact to new information in a manner that can be used to earn

abnormal returns.

Short$-$term market movements are difficult, if not impossible, to predict accurately.

Markets underreact to unanticipated events in a manner that can be used to earn

abnormal returns.

The market appears to be highly inefficient.

Markets tend to react slowly to unanticipated announcements.

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