If the market is efficient and securities are priced fairly then the _____ will be constant for all securities.
A) Systematic risk.
B) Standard deviation.
C) Reward-to-risk ratio.
D) Beta.
E) Risk premium.

Question

Quizplus · Accepted Answer

In an efficient market, where securities are priced fairly, the reward-to-risk ratio should be constant across all securities. This is because the prices of securities adjust to reflect all available information, meaning that investors should expect to receive a level of return that is commensurate with the level of risk they are taking on. Other measures like systematic risk, standard deviation, beta, and risk premium can vary between securities based on their individual characteristics and market conditions.

If the Market Is Efficient and Securities Are Priced Fairly