If financial markets are efficient, this implies that all securities should earn the same return.

Name: If financial markets are efficient, this implies that all securities should earn the same return.
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Question

If financial markets are efficient, this implies that all securities should earn the same return.

Quizplus · Accepted Answer

Efficient financial markets mean that securities' prices fully reflect all available information at any time, not that all securities should earn the same return. Different securities have different levels of risk, and the expected return on an investment is typically correlated with its risk level.

If Financial Markets Are Efficient, This Implies That All Securities Should