If the financial markets are efficient, then investors should expect their investments in those markets to:

Question

Quizplus · Accepted Answer

In efficient financial markets, prices fully reflect all available information, meaning that securities are fairly priced. Therefore, new investments would have a net present value (NPV) of zero, indicating that they are expected to earn a return exactly equal to the risk-adjusted market rate.

If the Financial Markets Are Efficient, Then Investors Should Expect