An eﬃcient market implies _________________________.
A) that, on average, all investments have a negative NPV
B) that, on average, all investments have a zero NPV
C) that, on average, all investments have a positive NPV
D) that there tend to be more positive NPV investments than negative NPV investments
E) Nothing about the NPV of an investment

Question

Quizplus · Accepted Answer

An efficient market implies that prices reflect all available information, meaning that there are no undervalued or overvalued assets. As such, investments would have a zero NPV on average, as the market has already factored in all expected cash flows and future opportunities for return.

An Eﬃcient Market Implies _________________________