Asked by Madison Schmitz on May 10, 2024
Verified
If the U.S. capital markets are not informationally efficient, ________.
A) the markets cannot be allocationally efficient
B) systematic risk does not matter
C) no type of analysis can be used to generate abnormal returns
D) returns must follow a random walk
Informationally Efficient
The concept where a market is said to be informationally efficient if all relevant information is fully and immediately reflected in a security's market price.
Allocationally Efficient
Refers to a market scenario where resources are distributed in a way that maximizes the benefits to all participants, considering their preferences and needs.
- Get acquainted with the idea of market efficiency in several expressions and its significance for investment strategy planning.
Verified Answer
TH
Termaine HughesMay 16, 2024
Final Answer :
A
Explanation :
If the U.S. capital markets are not informationally efficient, it means that not all available information is reflected in stock prices. This inefficiency can lead to misallocation of resources, hence the markets cannot be allocationally efficient.
Learning Objectives
- Get acquainted with the idea of market efficiency in several expressions and its significance for investment strategy planning.