If the ﬁnancial markets are eﬃcient, then investors should expect their investments in those markets to:

Question

Quizplus · Accepted Answer

If the financial markets are efficient, then all available information is already reflected in asset prices. Therefore, investors should expect that investments will have zero net present values, meaning that the expected return on an investment is equal to its required rate of return. This does not mean that there will never be opportunities for positive returns or arbitrage opportunities, but these should not be routine or persistent. Similarly, negative returns should not be routine in an efficient market.

If the ﬁNancial Markets Are Eﬃcient, Then Investors Should Expect