In an efficient market, investors will only find positive-NPV trading opportunities if they have some form of competitive advantage over other investors.

Question

Quizplus · Accepted Answer

In an efficient market, all available information is already reflected in the price of the asset, leaving no room for profitable arbitrage opportunities for average investors. Only investors who possess some form of competitive advantage, such as superior knowledge or analysis, can identify and exploit positive-NPV trading opportunities.

In an Efficient Market, Investors Will Only Find Positive-NPV Trading