which of the following statements is false: 1) if the profit opportunities from
ID: 2781275 • Letter: W
Question
which of the following statements is false:
1) if the profit opportunities from having private information are large, other individuals will atempt to gain the expertise and devote the resources needed to acquire it.
2) when private information is relegated to the hands of a relatively small number of investors, these investors may be able to profit by trading on their information.
3) when a buyer seeks to buy a stock, the willingness of other parties to sell the same stock suggests that they value the stock differently.
4) since stock markets aggregate the information and view of many different investors, we expect the stock price to react slowly to new publicly available information as the investors continue to trade until a consensus is reached as to the new value of the stock.
Explanation / Answer
All 4 assertions are true in capital markets. However, market information is only one criteria to govern market concensus to regulate purchase and sale turnover of stock.
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