Select all that are true with respect to the theory of market efficiency. Group of answer choices If markets are efficient, investors cannot earn positive returns If markets are efficient, it means prices are always "right" in that the reflect perfect foresight into what will happen in the future Strong form market efficiency suggests that all information, public or private, is reflected in current prices in an unbiased way
Select all that are true with respect to the theory of market efficiency. Group of answer choices If markets are efficient, investors cannot earn positive returns If markets are efficient, it means prices are always "right" in that the reflect perfect foresight into what will happen in the future Strong form market efficiency suggests that all information, public or private, is reflected in current prices in an unbiased way
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Select all that are true with respect to the theory of market efficiency.
Group of answer choices
If markets are efficient, investors cannot earn positive returns
If markets are efficient, it means prices are always "right" in that the reflect perfect foresight into what will happen in the future
Strong form market efficiency suggests that all information, public or private, is reflected in current prices in an unbiased way
Market efficiency suggests that relevant information is quickly impounded into prices
If transaction costs are high, then prices are less likely to reflect all available information
Expert Solution
Step 1: efficient market hypothesis
the given question is related to the theory of market efficiency
The theory of market efficiency states that prices of shares reflect the available information.
The theory informs us about the efficiency of the financial market which can help in making decisions about investment, regulation of the market and managing portfolios.
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