Asked by Muwal Deepak on Jul 02, 2024
Verified
Which of the following is the best definition for the concept of efficient capital market?
A) The excess return required from an investment in a risky asset over a risk-free investment.
B) Market in which security prices reflect available information.
C) A symmetric, bell-shaped frequency distribution that can be defined by its mean and standard deviation.
D) The average compound return earned per year over a multi-year period.
E) The hypothesis is that actual capital markets are efficient.
Efficient Capital Market
Market in which security prices reflect available information.
Security Prices
The cost or price of financial instruments such as stocks, bonds, and derivatives, determined by market supply and demand.
- Acquire knowledge on the fundamentals of market efficiency, particularly the semi-strong form and the efficient distribution of capital in markets.
Verified Answer
VL
Vanessa LaheeJul 02, 2024
Final Answer :
B
Explanation :
An efficient capital market is one in which security prices fully reflect all available information at any point in time, allowing the market to allocate capital to its most productive uses.
Learning Objectives
- Acquire knowledge on the fundamentals of market efficiency, particularly the semi-strong form and the efficient distribution of capital in markets.