If financial markets were not efficient,it would be more likely for producers to:
A) finance investments in a zero-NPV transaction.
B) finance investments in a positive NPV transaction.
C) avoid the need for financing investments.
D) find desirable securities for financing investments.

Question

Quizplus · Accepted Answer

In an inefficient financial market, there may be opportunities for producers to find positive NPV transactions that are undervalued by the market. This would allow them to finance investments with potential for greater returns. Financing investments with zero-NPV transactions would not generate any returns, while avoiding the need for financing investments altogether is unlikely. It may also be more difficult to find desirable securities for financing investments in an inefficient market.

If Financial Markets Were Not Efficient,it Would Be More Likely