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Asked by zaimel moses on May 06, 2024

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Market prices reacting suddenly to unexpected news announcements reinforces the argument that the financial markets are efficient.

Market Prices

The current value at which an asset or service can be bought or sold in an open and competitive market.

Unexpected News

Information that comes without warning, often having a potential impact on market prices and investor decisions.

Efficient

Describes an economy, market, or decision-making process that effectively allocates resources and inputs in a way that maximizes output or returns with minimal waste.

  • Grasp the importance of market reactions to unexpected news as evidence of market efficiency.
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JR
Jordan RichardsonMay 08, 2024
Final Answer :
True
Explanation :
This phenomenon is consistent with the Efficient Market Hypothesis (EMH), which posits that financial markets are efficient in reflecting all available information in the prices of securities. Sudden reactions to unexpected news announcements indicate that the market is quickly incorporating new information into asset prices.

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