Which one of these is an indicator that a market is efficient?
A)Positive serial correlation coefficients equal to or greater than 1
B)Lack of daily price movement
C)Lack of any adjustment for degree of risk
D)Repetitive price patterns
E)Normal rates of return

Question

Quizplus · Accepted Answer

Normal rates of return are considered an indicator of market efficiency as it implies that investors are receiving a fair rate of return reflecting the risks they have taken. In an efficient market, abnormal returns are not possible because all available information is already reflected in the market price. A lack of daily price movement or repetitive price patterns may be indications of a stagnant market rather than an efficient one. Positive serial correlation coefficients greater than one are not possible, and a lack of adjustments for risk suggests that investors may not be making rational decisions.

Which One of These Is an Indicator That a Market