If Capital Markets Are Efficient, Then the Purchase or Sale

question 54

True/False

If capital markets are efficient, then the purchase or sale of any security at the prevailing market price is never a positive-NPV transaction.

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Definitions:

Reactive Power

The portion of electricity that oscillates between the source and load, not converted into useful work, often measured in Volt-Amperes-Reactive (VAR).

True Power

The actual power consumed by a device, calculated in watts as the product of voltage, current, and the cosine of the phase angle for AC circuits.

Clamp-On Ammeter

A type of ammeter that can measure a wire's current without the need to disconnect it from the circuit, by clamping around the wire.

True Power

The actual power consumed by a circuit, measured in watts, as opposed to apparent power, which includes reactive power.