If capital markets are completely efficient, then the purchase or sale of any security at the prevailing market price is never a positive-NPV transaction.

Question

Quizplus · Accepted Answer

If capital markets are completely efficient, the prevailing market price already reflects all available information and expectations, leaving no opportunities for positive-NPV transactions through buying or selling securities. Therefore, any purchase or sale at the prevailing market price would not result in a positive-NPV transaction.

If Capital Markets Are Completely Efficient, Then the Purchase or Sale