CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

Which of the following statements is true concerning the efficient market hypothesis?

I. Equilibrium rates of return prevail.
II. Firms' securities sell at their "fair" value.
III. Financial investors cannot earn a positive return.
Correct Answer: I and II

User Contributed Comments 4

User Comment
saltnvinegar what will be equilibrium rates of return here??
gkobylko I guess, no one can obtain above average risk-adjusted basis return
kutta2102 The equilibrium rate is the long term arithmentic mean for an index. For example, if you plotted the yearly stock returns for DJIA for the last 50 years and drew a line, it will show that while some years had greater returns compared to others, on the whole the returns will be in the equilibrium rate ballpark.
cong Adjustment to equilibrium rate is inevitable in the long run.
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