Question

The tendency when the ______ performing stocks in one period are the best performers in the next and the current ________ performers are lagging the market later is called the reversal effect.A. worst; bestB. worst; worstC. best; worstD. best; best

Answer 1

Answer: Option A

Explanation: In simple words, reversal effect refers to the situation when due to announcement of some relevant news in the market the conditions prevailing changes drastically leading to worst values stocks performing better and vice versa.

The reversal effect is seen as a long term effect caused due to short term errors that happened in the past.