In an efficient capital market,

Question

Quizplus · Accepted Answer

An efficient capital market is characterized by the full and quick incorporation of new information into securities prices. This means that security prices reflect the collective knowledge and expectations of all investors at any given point in time. As a result, investors and financial managers have no reason to believe that the securities are not priced at or near their true value, given that all available information is already reflected in their prices. Furthermore, prices of securities adjust quickly as new information becomes available to the market, ensuring that the market remains efficient. Therefore, all of the statements - A, B, and C - are true in an efficient capital market.

In an Efficient Capital Market