What Is Meant by the Statement That an Efficient Market

question 35

Multiple Choice

What is meant by the statement that an efficient market prices securities "correctly?"

• A)The prices reported by the securities exchanges accurately reflect real transactions.
• B)Riskier securities are priced to yield higher returns.
• C)The expected return on securities is equal to the risk-free rate of return.
• D)Both buyers and sellers agree that the prices are fair.

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Definitions:

Numerical Amount

A quantity or value expressed in numbers.

Written Amount

The value of a document or instrument stated in words.

Five And 62/100

A manner to express the numeric value 5.62, often found in financial documents.

Cash Money

Physical money in the form of banknotes and coins, as opposed to electronic or digital forms of currency.