Part 5/10:
Markets are constantly in flux, with prices adjusting to new information. When fluctuations occur due to events like scandals or policy announcements, traders respond by buying underpriced shares or selling overpriced ones, leading to price adjustments that align more closely with perceived probabilities.
For instance, if a scandal involving candidate Alpha emerges and the share price drops significantly, the market is signaling that this development is likely to affect Alpha’s chances of winning. Thus, the price change acts as a barometer for gauging the impact of real-world events on predicted outcomes.