Which one of the following statements is correct concerning market efficiency?
A)New information will gradually be reflected in a stock's price to avoid any sudden change in the price of the stock in an efficient market.
B)In an efficient market,some market participants will have an advantage over others.
C)If a market is efficient,arbitrage opportunities should be common.
D)Real asset markets are more efficient than financial markets.
E)A firm will generally receive a fair price when it sells shares of stock in an efficient market.

Question

Quizplus · Accepted Answer

In an efficient market, prices reflect all available information. Therefore, when a firm sells shares of stock, the price at which it sells should be fair, meaning it accurately reflects the firm's value based on current information. This is a fundamental principle of market efficiency, as described by the Efficient Market Hypothesis.

Which One of the Following Statements Is Correct Concerning Market