An efficient market is defined as one in which:
A)all participants have the same opportunity to make the same returns.
B)all participants have the same legal rights and transactions costs.
C)securities prices quickly and fully reflect all available information.
D)securities prices are completely in line with the intrinsic value.

Question

Quizplus · Accepted Answer

An efficient market is one in which securities prices quickly and fully reflect all available information. This means that there are no mispricings or arbitrage opportunities for investors to profit from. While choices A and B may be important factors in creating an efficient market, they are not the defining characteristics of an efficient market. Choice D is false because it assumes that securities have an intrinsic value, which is a contested idea in finance.

An Efficient Market Is Defined as One in Which