If capital markets are efficient,then the sale or purchase of any security at the prevailing market price is generally:
A)a positive-NPV transaction.
B)a zero-NPV transaction.
C)a negative-NPV transaction.
D)no general trend exists for such transactions.

Question

Quizplus · Accepted Answer

If capital markets are efficient, then the market price of a security already reflects all available information about the security. Therefore, buying or selling at the prevailing market price would result in a zero net present value (NPV) transaction, meaning that the expected return on the investment would be equal to the required rate of return.

If Capital Markets Are Efficient,then the Sale or Purchase of Any