Question

Which of the following is not part of the theory of informational efficiency and the efficient...

Which of the following is not part of the theory of informational efficiency and the efficient markets hypothesis?

A All information relevant to the values of traded securities can be obtained easily and at low cost.
B Buyers and sellers do not act rationally.
C Current market prices reflect all publicly available information.
D The market contains many buyers and sellers.
E All information contained in past price movements is fully reflected in current prices.
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Answer #1

A market is considered as efficient when all stock related information is publicly available to all investor and invest make decision rationally for make investment decision. In efficient market, required rate of return is equal to expected rate of return and market value of stock is equal to book value of stock. in efficient market all information sare publically avaiable and transaction cost is low.

In efficient market both parties, Buyer and seller act rationally while making decision about investment.

So, Option (B) is not part of the theory of informational efficiency and the efficient markets hypothesis.

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