CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

External (informational) efficiency means that ______
A. many buyers and sellers are aware of the trading activity of the market.
B. the market price reflects all available information about a security.
C. the price information generated in the market is broadcast widely.
Explanation: Although all of the characteristics above would be nice and are associated with modern well-functioning markets, the only aspect that is related to external efficiency is whether or not the market price reflects the available information. Ask the question: "How is what we know about a security related to the price of that security?"

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iceluke external vs. internal efficiency
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