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:

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