According to the Rational Expectations Theory:
A) Information costs are large relative to the value of securities traded
B) Securities prices reflect all available information
C) Interest rate changes are related to anticipated information
D) Interest rate changes follow predictable patterns
E) Monetary policy will always be effective

Question

Quizplus · Accepted Answer

Rational Expectations Theory posits that securities prices reflect all available information, as market participants use all available data to make informed predictions about future prices.