- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 38. Market Efficiency
- Subject 1. The Concept of Market Efficiency
CFA Practice Question
Which of the following is not a characteristic of an efficient market?
A. Prices adjust rapidly to new information, and all available information is reflected in market prices.
B. Market prices never over-adjust or under-adjust.
C. There are many competing investors.
Explanation: An efficient market does not require all assets be correctly priced at all times. It merely requires that equilibrium (the correct price) be re-established reasonably quickly after new information arrives.
User Contributed Comments 0
You need to log in first to add your comment.