The efficient market hypothesis states that markets:
A) currently contain all available information and correctly value instruments.
B) are efficient when buyers and sellers act in their own best interest markets.
C) need adequate regulation to be efficient.
D) make trades without restriction.

Question

Quizplus · Accepted Answer

The efficient market hypothesis suggests that prices in financial markets reflect all available information at any given time, meaning that investors cannot consistently achieve returns greater than market averages. This theory implies that markets are effectively in equilibrium, and efficient, when buyers and sellers act independently, each with their own rational expectations, to provide the most economical and profitable economic outcome for all participants.

The Efficient Market Hypothesis States That Markets