If the market is efficient, then the cumulative abnormal return should remain close to __________ percent.
A) - 10
B) 0
C) 10
D) 50
E) 100

Question

Quizplus · Accepted Answer

If the market is efficient, then the price incorporates all available information, and there would be no opportunity for arbitrage or abnormal returns. Therefore, the cumulative abnormal return should remain close to zero percent. The other choices (-10, 10, 50, and 100) are too large and unrealistic for a market that is assumed to be efficient.

If the Market Is Efficient, Then the Cumulative Abnormal Return