Final answer:
Informational efficiency in financial markets results in fairer stock prices because they reflect all available information. Expectations about a company's future performance majorly influence its stock price. Continuous analysis is required for predicting stock prices as they can pivot based on changing expectations. (Option C)
Step-by-step explanation:
Informational efficiency in financial markets leads to fairer stock prices, not necessarily higher or lower. Efficient markets reflect all available information about a stock's value in its price, so participants can trust that the stock price is set at a fair market value. This efficiency comes from the market's ability to disseminate information quickly and accurately regarding the relative scarcities of goods, services, labor, and financial capital, which in turn influences stock prices.
Expectations play a crucial role in determining stock prices. If expectations shift, so do stock prices. However, predicting the success of a stock is not straightforward; analysis by market participants who research and predict future performance around the clock is necessary. A company believed to have poor prospects may end up performing exceedingly well, thus significantly affecting its stock price in the long run.