Market prices can be efficiently priced if
A)brokerage commissions are zero.
B)a number of interested traders use the publicly available information.
C)securities always offer a positive rate of return to investors.
D)the prices are guaranteed by the U.S.Securities and Exchange Commission.
E)taxes are irrelevant.

Question

Quizplus · Accepted Answer

Market prices can be efficiently priced if a number of interested traders use the publicly available information. This is known as the efficient market hypothesis, which suggests that all available information is reflected in market prices, and hence prices are fairly valued at any given point in time. However, this does not imply that prices will always offer a positive rate of return, nor are prices guaranteed by any regulatory authority. Brokerage commissions and taxes can also affect market efficiency to some extent, but they are not the primary determining factors.

Market Prices Can Be Efficiently Priced If