A situation in which the price of an asset differs from its fundamental market value
A) indicates that unexploited profit opportunities exist.
B) indicates that unexploited profit opportunities do not exist.
C) need not indicate that unexploited profit opportunities exist.
D) indicates that the efficient market hypothesis is fundamentally flawed.

Question

Quizplus · Accepted Answer

While a price discrepancy between an asset and its fundamental market value may present opportunities for profit, it does not necessarily mean there are unexploited profit opportunities. Factors such as transaction costs or information asymmetry could prevent investors from taking advantage of the price discrepancy. Additionally, the efficient market hypothesis does not necessarily predict that all assets will always be priced at their fundamental market value, as it allows for some level of irrationality and noise in markets.

A Situation in Which the Price of an Asset Differs