According to the efficient market hypothesis
A) one cannot expect to earn an abnormally high return by purchasing a security.
B) information in newspapers and in the published reports of financial analysts is already reflected in market prices.
C) unexploited profit opportunities abound, thereby explaining why so many people get rich by trading securities.
D) all of the above are true.
E) only A and B of the above are true.

Question

Quizplus · Accepted Answer

According to the efficient market hypothesis, it is not possible to earn an abnormally high return by purchasing a security, as all publicly available information is already reflected in the market prices. This means that even information in newspapers and published reports of financial analysts are already factored into the prices. The idea that unexploited profit opportunities exist is therefore not supported by this theory.

According to the Efficient Market Hypothesis