Which one of the following statements is correct concerning market eﬃciency?
A)Real asset markets are more eﬃcient than ﬁnancial markets.
B)If a market is eﬃcient, arbitrage opportunities should be common.
C)In an eﬃcient market, some market participants will have an advantage over others.
D)A ﬁrm will generally receive a fair price when it sells shares.
E)New information will gradually be reﬂected in a stock's price to avoid any sudden change
In the price of the stock.

Question

Quizplus · Accepted Answer

Market efficiency implies that the prices of assets accurately reflect all available information. In an efficient market, a firm will generally receive a fair price when it sells shares. Real asset markets may not be more efficient than financial markets, as the efficiency of a market depends on how quickly and accurately information is incorporated into prices. If a market is efficient, arbitrage opportunities should be rare rather than common. In an efficient market, it is difficult for any market participant to consistently have an advantage over others. The gradual adjustment of stock prices to new information is a characteristic of market efficiency.

Which One of the Following Statements Is Correct Concerning Market