In order to conclude that markets are efficient, we assume that they are perfectly competitive.

Question

Quizplus · Accepted Answer

Market efficiency, in the context of the Efficient Market Hypothesis, assumes that all available information is fully reflected in asset prices at all times, which is more likely in a perfectly competitive market where numerous buyers and sellers have equal access to information and transactions are cost-free, allowing for the immediate and unbiased incorporation of information into prices.

In Order to Conclude That Markets Are Efficient, We Assume