Efficient-market hypothesis is the theory describing the behavior of an assumed "perfect" market in which securities are typically in equilibrium, security prices fully reflect all public information available and react swiftly to new information, and, because stocks are fairly priced, investors need not waste time looking for mispriced securities.

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The efficient-market hypothesis states that prices of securities fully reflect all available public information and react quickly to new information, resulting in a market where stocks are fairly priced and investors do not need to spend time looking for mispriced securities.

Efficient-Market Hypothesis Is the Theory Describing the Behavior of an Assumed