according to the efficient markets hypothesis, the number of people who think a stock is overvalued exactly balances the number

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Sonja [21]

9 months ago

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according to the efficient markets hypothesis, the number of people who think a stock is overvalued exactly balances the number

of people who think a stock is undervalued. a. true b. false

Business

1 answer:

RSB [31] · Answer 1 · 2024-06-12T13:12:45+03:00

The given statement is true because according to the Efficient Markets Hypothesis (EMH), the number of people who think a stock is overvalued balances exactly the number of people who think a stock is undervalued.

The Efficient Markets Hypothesis (EMH) is a hypothesis that states when new information enters the market, it is quickly reflected in stock prices and as a result, neither fundamental nor technical analysis can generate excess returns. This means that the prices found in the current market only respond to new information.

According to the EMH hypothesis, there are always an equal number of people in two groups: people in one group consider that stock is undervalued; in contrast, people in the other group assume that stock is overvalued.

You can learn more about Efficient Markets Hypothesis (EMH) at

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