Which one of these is an indicator that a market is efficient?
A)Positive serial correlation coefficients equal to or greater than 1
B)Lack of daily price movement
C)Lack of any adjustment for degree of risk
D)Repetitive price patterns
E)Normal rates of return

Question

Quizplus · Accepted Answer

Normal rates of return indicate that the market is efficient, meaning that the prices of assets fully reflect all available information. In an efficient market, it is difficult for investors to consistently earn higher-than-normal rates of return. A lack of adjustment for degree of risk (C) would suggest an inefficient market, as investors would be able to earn higher than normal rates of return by taking on additional risk. Repetitive price patterns (D) and lack of daily price movement (B) are not necessarily indicators of market efficiency. Positive serial correlation coefficients equal to or greater than 1 (A) indicate a high degree of correlation between successive price changes, which suggests inefficiency rather than efficiency.

Which One of These Is an Indicator That a Market