When there is unexpected news in the market, the market is more likely to:Become more volatileRemain unchangedShut down
Question
When there is unexpected news in the market, the market is more likely to:
- Become more volatile
- Remain unchanged
- Shut down
Solution
When unexpected news hits the market, the typical reaction is that the market becomes more volatile. This volatility arises because investors react to the news with uncertainty and adjust their positions, leading to increased buying and selling activity. The sudden influx of trades based on new information drives price fluctuations, as market participants reassess the value of assets based on the latest developments.
In contrast, the market is unlikely to remain unchanged, as new information typically disrupts the existing equilibrium. Shutting down the market is also not a common reaction; while this can happen in extreme circumstances (such as during a severe crisis), it is not a typical response to unexpected news. Thus, the most accurate response is that the market becomes more volatile in reaction to unexpected news.
Similar Questions
History shows that technological change _____ produces big market shifts.Multiple choice question.rarelyoften
what are the two things that need to be considered when predicting whether the market will fall?
According to stock market psychologya.History repeats itselfb.more faith is placed in predictions of the futurec.investors forget the past
A firm should always try to enter a new market as early as possible in order to succeed. 1 pointTrueFalse
Explain one factor that could lead to a business experiencing declining market share in a growing market.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.