If Capital Markets Are Completely Efficient, Then the Purchase or Sale

question 22

True/False

If capital markets are completely 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:

Price Floor

A government- or authority-imposed minimum price set above the equilibrium price, preventing the price of a good or service from falling lower.

Equilibrium Price

The value at which the supply of a good or service is equal to its demand, ensuring a balanced market.

Demand Equation

A mathematical formula that describes the relationship between the quantity of a good demanded and its price, along with other factors affecting demand.

Supply Equation

A mathematical expression that shows the relationship between the quantity of a good that producers are willing to sell and factors that influence this quantity, such as price.