Another way to state the efficient markets condition is: in an efficient market,
A) unexploited profit opportunities will be quickly eliminated.
B) unexploited profit opportunities will never exist.
C) arbitragers guarantee that unexploited profit opportunities never exist.
D) every financial market participant must be well informed about securities.

Question

Quizplus · Accepted Answer

The efficient markets condition is the idea that all available information is already incorporated into asset prices, making it impossible for investors to consistently earn a return greater than the market average. This means that any unexploited profit opportunities, which would imply that prices do not reflect all available information, will quickly be eliminated by other investors who have access to the same information. While it is possible for there to be temporary inefficiencies in the market, arbitragers do not guarantee that unexploited profit opportunities never exist, and it is not necessary for every financial market participant to be well informed about securities for the efficient markets condition to hold.

Another Way to State the Efficient Markets Condition Is: in an Efficient