• Where the price is not determined by demand and supply forces.
• If the price is not consistent with the activities of the firm e.g a decline in share price of a firm with very good growth prospects.
• Price is not compatible with the price of other similar shares of firms in the same industry
• If there is insider trading:
This situation arises where individuals within the firm in privileged positions e.g top management and director take advantage of the information available to them which has not been released to the public.
They may use such information to dispose off share to make capital gains or avoid capital loss
Kavungya answered the question on March 12, 2019 at 05:47
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