Question

In a capital market, which is efficient

Q: Answer-In a capital market, which is efficient informationally:

In an efficient market, new information is quickly reflected in the prices of securities. Active investment strategies will underperform in efficient markets because there are more costs involved in undertaking them and passive investment strategies will generate consistent profits without incurring the additional costs.

informationally:

A Securities’ prices reflect new information quickly

B Investors react to new information and make decisions quickly

C Active investment strategies generate more profits than passive investments

D Both b and c

E All of the above

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In a capital market, which is efficient

Solution