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 1 year agoRelated Solutions
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