According to the efficient market theory,
A) prices of actively traded stocks can only be under- valued in an efficient market.
B) prices of actively traded stocks can be under- or over- valued in an efficient market, and bear searching out.
C) prices of actively traded stocks do not differ from their true values in an efficient market.
D) prices of actively traded stocks can only be over- valued in an efficient market.

Question

Quizplus · Accepted Answer

The efficient market theory states that in an efficient market, prices of actively traded stocks reflect their true values and do not differ from them. Therefore, there is no chance for stocks to be under or overvalued in an efficient market.

According to the Efficient Market Theory