Question

15. A market decline of 23% on a day when there is no significant macroeconomic event ______ consistent with the EMH because ________. a. would be, it was a clear response to macroeconomic news b. would be, it was not a clear response to macroeconomic news c. would not be, it was a clear response to macroeconomic news d. would not be, it was not a clear response to macroeconomic news e. None of these are correct.

Answer 1

Answer:Option c

Explanation:

Some of the macro economic event such as interest rates, unemployment, economic growth and inflation affects the stock markets .  If any of these events occur then market has its effect on it. EMH is the efficient market hypothesis that the asset prices reflect the market situation.

When the macroeconomic event has not taken place but there is market decline then EMH is not consistent with the event or the macro economic news.Market prices also reflect due to the latest information if any.