The efficient market hypothesis implies that
A)all investments should earn the same average rate of return over time.
B)any investment should earn a normal return commensurate with the investment's risk.
C)efficient markets will tend to have fixed prices from one day to the next.
D)stock prices are only efficient when all investors review their portfolios on a daily basis.
E)investors must be disinterested in their investments for the markets to be efficient.

Question

Quizplus · Accepted Answer

The efficient market hypothesis states that all available information is reflected in the current stock price, therefore any investment should earn a normal return commensurate with the investment's risk. In other words, the hypothesis asserts that it is impossible to consistently achieve returns that are higher than the market average.

The Efficient Market Hypothesis Implies That