The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2

-The equity market is said to be an efficient market because it is difficult for an investor to continually earn above-normal profits.

Question

The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2
 
-The equity market is said to be an efficient market because it is difficult for an investor to continually earn above-normal profits.

Quizplus · Accepted Answer

The efficient market theory suggests that it is difficult for investors to consistently earn above-normal profits in an efficient market. The existence of supply and demand curves in the equity market implies that prices adjust quickly to any new information, making it difficult for investors to consistently earn profits. Therefore, the statement is true.

The Figure Given Below Shows the Demand [D and D']