Which of the following statements is FALSE according to theory of the ‘efficient market hypothesis’?
a.
Since securities are fully and fairly priced, it follows that investors should accept the same level of stock returns regardless of the risk tolerance.
b.
At any point in time, security prices fully reflect all public information available about the firm and its securities, and these prices react swiftly to new information.
c.
Changes in investors’ assessments of a firm’s outlook lead to changes in the supply and demand for its shares, which can cause a change in the price of the shares.
d.
Securities are typically in equilibrium, meaning they are fairly priced and their expected returns equal their required returns.
e.
Since securities are fully and fairly priced, it follows that investors should not waste their time trying to find and capitalise on mispriced (undervalued or overvalued) securities.
