The "efficient markets hypothesis" proposes that
A) market prices reflect information known only to internal stakeholders.
B) market prices reflect all information about a company.
C) market prices reflect information known only to external stakeholders.
D) information asymmetry is required.

Question

Quizplus · Accepted Answer

The efficient markets hypothesis proposes that market prices reflect all information about a company, both internal and external. This means that any information that could affect the value of a security is already reflected in its price, and it is impossible to consistently outperform the market by exploiting this information. In other words, the market is "efficient" in processing and incorporating all available information into stock prices.

The "Efficient Markets Hypothesis" Proposes That