I'm having a hard time understanding the meaning of the last paragraph in bold. Can someone explain it for me, in simple English, using simpler terms?
Noise arises from an external shock, which can be big or small. Big ones are terrorist attacks and war, and smaller but no less influential ones are related to financial conditions, such as a change in the availability of credit or margin requirements, affecting liquidity. In practice, many events that are called noise are in fact predictable, like a change in tax rates on securities trading vs. capital gains. But such a change is still noise in the sense that it comes from outside the security's main conditions and is not inherent in the security itself.
Academics are mixed on whether the shock has to be external, and include a variance in dividend from the forecast as a shock and noise, too, even though it's clearly internal to the fundamentals of the security.