If a market is efficient, then

Question

Quizplus · Accepted Answer

If a market is efficient, it means that all available information is already reflected in asset prices. This makes it difficult for anyone, including professional money managers and individuals, to consistently earn profits by exploiting mispricings or arbitrage opportunities. However, it does not mean that high-risk speculative investments are the only way to earn profits. An efficient market is one where all available information is reflected in the current price of a security, making it difficult for investors to consistently earn excess returns. However, this does not mean that only professional money managers can earn profits, nor does it mean that there are an abundance of arbitrage opportunities available. Highly speculative investments may actually be riskier and less likely to generate consistent profits in an efficient market.

If a Market Is Efficient, Then