If the Financial Markets Are Efficient Then

Multiple Choice

If the financial markets are efficient then:

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