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An important belief underlying the use of technical analysis techniques is that:Question 6Select one:a.security prices react rapidly to new information.b.security prices react gradually to new information.c.there are sufficient investors in the market to provide enough liquidity to keep price changes relatively small.d.all investors have immediate and relatively low-cost access to information.

Question

An important belief underlying the use of technical analysis techniques is that:Question 6Select one:a.security prices react rapidly to new information.b.security prices react gradually to new information.c.there are sufficient investors in the market to provide enough liquidity to keep price changes relatively small.d.all investors have immediate and relatively low-cost access to information.

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Solution

The belief underlying the use of technical analysis techniques is that security prices react rapidly to new information. This is because technical analysis is based on the study of past market data, primarily price and volume, to forecast future price movements. This type of analysis assumes that all current market information is reflected in the price, so when new information is presented, the price will adjust quickly to reflect this new data. Therefore, the correct answer is a. security prices react rapidly to new information.

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