Question 2 A loan note is issued for P1,000,000. The loan note is redeemable at P1,250,000. The term of the loan is five years and interest is paid at 5.9% pa. The effective rate of interest is 10%. Show how the value of the loan note changes over its life.

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Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.