Question

In: Accounting

When market prices fully reflect all information available to the​ public, it is referred to as...

When market prices fully reflect all information available to the​ public, it is referred to as

A. efficient capital market.

B. transparency.

C. efficient pricing.

D. effective capital marke

Solutions

Expert Solution

Solution: The answer is (A) Efficient Capital Market

Reason:

Efficient Capital Market also be called as Efficient Capital Hypothesis formulated by Eugene Fama in 1970. Efficient Capital Hypothesis suggests that at a any given time, prices fully reflect all available information about a particular stock or market.

According to Efficient Capital Hypothesis, no investor has advantage in predicting the market because all the information is already available in the market to everyone.

Option B is not correct because transparency means operating openly and available to everyone but this is not relating to market prices only.

Option C is not correct because efficient pricing is the concept that the price at which an asset sells should already reflect all public demand and supply information.

Option D is not correct because effective capital market talks more about success in desired productivity.

ekkarill92 answered 9 months ago
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