Efficient financial markets suggest that

Question

Quizplus · Accepted Answer

Efficient financial markets imply that stock prices always reflect all available information, including fundamental and ratio analysis. As a result, the market is considered to be perfectly efficient, meaning that it is extremely difficult to obtain superior returns consistently. Therefore, fundamental analysis does not lead to superior returns in an efficient market. Ratio analysis does not predict changes in stock prices, but it helps investors understand and compare firms' financial performance, which contributes to market efficiency. However, it does not reduce market efficiency.

Efficient Financial Markets Suggest That