Which of the following is NOT a necessary condition for an efficient market?
A) many buyers and sellers
B) no prohibitively high barriers to entry
C) free and readily available information available to all participants
D) no trading or transaction costs

Question

Quizplus · Accepted Answer

In an efficient market, while low or minimal transaction costs are desirable to facilitate trading and ensure that prices reflect all available information, the absence of trading or transaction costs is not a necessary condition. Markets can still be considered efficient if they have some level of transaction costs, as long as the other conditions (such as many buyers and sellers, low barriers to entry, and freely available information) are met. These other conditions ensure that prices reflect all available information, which is the core concept of market efficiency.

Which of the Following Is NOT a Necessary Condition for an Efficient