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, the reward-to-risk ratio, also known as the Sharpe ratio, should be constant for all securities as it reflects the compensation investors receive for taking on risk.

If the Market Is Eﬃcient and Securities Are Priced Fairly