Question
Which of the following is the best statement of the efficient markets hypothesis? Because of competition among investors, information gets incorporated quickly into share prices,
Which of the following is thebeststatement of the efficient markets hypothesis?
Because of competition among investors, information gets incorporated quickly into share prices, and share prices are unbiased measures of fundamental value.
Investors with information that a stock has positive net present value (NPV) will buy it, while investors with information that a stock has negative net present value (NPV) will sell it.
If investors are rational and have the same information, share prices will reflect all available information.
Investors' valuations require accurate information about a firm's cash flows and accurate predictions of future cash flows.
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