The efficient market hypothesis suggests that the market price of a firm's stock is an objective indicator of a firm's past, current, and expected future performance.

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The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the efficient-market hypothesis. From this perspective, a firm's share price provides an objective performance indicator.

The Efficient Market Hypothesis Suggests That the Market Price of a Firm's