One of the conditions of market efficiency,rationality:
A)always holds.
B)might not hold in the realm of behaviorial finance.
C)never holds.
D)means investors will never visit a casino.
E)None of the above.

Question

Quizplus · Accepted Answer

Market efficiency assumes that all investors act rationally and have access to the same information, which may not always hold true in practice. In the realm of behavioral finance, investors may exhibit biases, emotions, and heuristics that deviate from rationality, leading to market inefficiencies. Therefore, option B is correct. Options A, C, and D are incorrect since they pose extreme or unrelated statements to the condition of rationality in market efficiency.

One of the Conditions of Market Efficiency,rationality