A market in which prices reflect all available information in a rational way is said to be
A) rationally efficient.
B) informationally efficient.
C) hypothetically efficient.
D) a stock market.

Question

Quizplus · Accepted Answer

A market that reflects all available information in a rational way is said to be informationally efficient. This means that all publicly available information is already reflected in the prices, making it difficult for investors to consistently earn abnormal returns based on that information alone. The other choices are incorrect, as A is not a commonly used term, C does not make sense in this context, and D is too narrow in scope.

A Market in Which Prices Reflect All Available Information in a Rational