Which of the following statements is TRUE if the efficient market hypothesis holds?
A)It implies perfect forecasting ability.
B)It implies that the market is irrational.
C)It implies that prices do not fluctuate.
D)It implies that prices reflect all available information.
E)It implies that tomorrow's price will be the same as today's price.

Question

Quizplus · Accepted Answer

The efficient market hypothesis states that prices of securities reflect all available information, meaning that it is not possible to consistently achieve higher returns than the market average. This does not imply perfect forecasting ability or that the market is irrational, and prices can still fluctuate. The hypothesis also does not suggest that tomorrow's price will be the same as today's.

Which of the Following Statements Is TRUE If the Efficient