What is meant by the statement that an efficient market prices securities correctly?
A) The prices reported by the securities exchanges accurately reflect real transactions.
B) Riskier securities are priced to yield higher returns.
C) The expected return on securities is equal to the risk-free return.
D) Both buyers and sellers agree that the prices are fair.

Question

Quizplus · Accepted Answer

In an efficient market, prices reflect all available information, meaning riskier securities are priced to yield higher returns to compensate for the increased risk.

What Is Meant by the Statement That an Efficient Market