An efficient market is a market that establishes correct prices for the securities that firms sell and allocates funds to their most productive use as a result of the intense competition among investors.

Question

Quizplus · Accepted Answer

An efficient market is characterized by the ability to quickly and accurately reflect new information in security prices. This leads to fair and accurate pricing, which ensures that investments are allocated to their most productive use. The competition among investors contributes to the efficiency of the market by driving prices towards their true value.

An Efficient Market Is a Market That Establishes Correct Prices