If the financial markets are efficient then: stock prices should remain constant. stock prices should increase or decrease slowly as new events are analyzed and the information is absorbed by the markets. an increase in the value of one security should be offset by a decrease in the value of another security. stock prices will only change when an event actually occurs, not at the time the event is anticipated. stock prices should only respond to unexpected news and events.

Question

Noah Roman

Business

8 November, 09:51

If the financial markets are efficient then: stock prices should remain constant. stock prices should increase or decrease slowly as new events are analyzed and the information is absorbed by the markets. an increase in the value of one security should be offset by a decrease in the value of another security. stock prices will only change when an event actually occurs, not at the time the event is anticipated. stock prices should only respond to unexpected news and events.

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Answers (1)

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Kadyn Pace · Answer 1

stock prices should respond only to unexpected news and events.

Explanation:

Let us understand the term "financial market":

Here where the trading places. We talk about shares, debentures, etc.

So when the financial markets are efficient, the market is ready with the information which has been incorporated in to the prices of the product. So with respect to the market value the stock price will change or respond only during the unexpected news and events.

It will not increase or decrease based on the new events. It will not remain constant too all times.