In an efficient market,__________.
A) security prices react quickly to new information
B) security prices are seldom far above or below their justified levels
C) security analysts will not enable investors to realize superior returns consistently
D) one cannot make money
E) a,b,and c

Question

Quizplus · Accepted Answer

In an efficient market, security prices react quickly to new information (choice A) and are seldom far above or below their justified levels (choice B) due to the constant competition among investors to exploit any mispricings. As a result, security analysts (choice C) will not enable investors to realize superior returns consistently since all publicly available information is already reflected in prices. Therefore, the best choice(s) is E.

In an Efficient Market,__________