In an inefficient market, what is most likely to occur?

In an inefficient market, prices tend to react slowly to new information. This sluggish response often results from investors not having full access to information or not acting on it promptly due to behavioral biases or a lack of market participation. As a result, even when pertinent news or events occur, it takes time for the prices to adjust, leading to situations where opportunities for profit can exist.

In contrast, efficient markets are characterized by quick adjustments to new information, always reflecting all available data accurately in the prices. Therefore, the other response options pertain to conditions found in efficient markets, where information is swiftly incorporated into market prices, making it difficult to take advantage of price discrepancies. Hence, the dynamics of an inefficient market are best encapsulated by the slow responsiveness of prices to new information.