Question

Market anomaly refers to _______. Multiple Choice a) price behavior that differs from the behavior predicted by the efficient market hypothesis b) an exogenous shock to the market that is sharp but not persistent c) a price or volume event that is inconsistent with historical price or volume trends d) a trading or pricing structure that interferes with efficient buying and selling of securities.

Answer 1

Answer: Option A

Step-by-step explanation: In simple words, market anomaly refers to the situation when the predicted price of a security differs from its actual price. The anomalies exist due to the forces that are not captured by the hypothesis.

The efficient market hypothesis states that every security is properly priced and there is no scope of abnormal returns. While due to dynamic business environment the scope arises fro some securities for abnormal returns leading to market anomalies.