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If average returns are not increasing in securities systematic risk, can we conclude from this that...

If average returns are not increasing in securities systematic risk, can we
conclude from this that capital markets are inefficient? Explain.

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First, we have to understand shat is systematic risk: It is a type of risk that is non - diversifiable risk. It comes from the volatilities of external factors. Which are noncontrollable. This may be due to political factors, economic downturn or natural disasters, etc. This are unavoidable.

On the other hand inefficient market means security prices are completely random and non-controllable. It majorly happens due to assymetry of information available about securities. Like details of upcoming production or recent improvement of product line of a company only available to few people.

So if markets return are not increasing due to systematic risk means these may be some unavoidable scenario. Like recent COVID19 situation a systematic risk. From this we can not conclude capital markets are inefficient

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