In an efficient market, investors cannot consistently earn above average profits after taking risk differences into account.

Question

Quizplus · Accepted Answer

In an efficient market, all available information is already reflected in stock prices, making it impossible for investors to consistently outperform the market by identifying undervalued or overvalued stocks. Risk-adjusted returns will therefore be equivalent to the overall market average.

In an Efficient Market, Investors Cannot Consistently Earn Above Average