Question

Bob believes that the market is efficient and all securities (stocks and bonds) are correctly priced. This implies that Bob also believes that the _____ is the same for all securities. Standard deviation Beta Reward-to-risk ratio Variance Risk premium

Answer 1

  Reward-to-risk

Bob believes that the market is efficient and all securities (stocks and bonds) are correctly priced. This implies that Bob also believes that the __Reward-to-risk___ is the same for all securities

If markets are efficient than share must be priced at fair value, there is no possibility of undervalued or overvalued share, therefore, all the share we will reflect risk to reward ratio. All the share will have the same risk to reward ratio