Financial theorists have identified two different types of efficiency in financial markets. the first, informational efficiency, contributes to the existence and strength of the other, economic efficiency. the degree of informational efficiency exhibited by a market refers to the types of information incorporated into the prices observed in the market and the speed with which prices adjust when new relevant information is released into the market. markets are said to exhibit one of three levels of informational efficiency: weak-form efficiency, semistrong-form efficiency, or strong-form efficiency. at any level, a market's informational efficiency is likely to be stronger when there is a number of market participants receiving and analyzing relevant security and market information in search of the most profitable investments. the potential for a security to generate returns is what generates a profitable investment, since these returns result from price increases and decreases that are larger than they should be based on the riskiness of the investment. true or false: the degree of economic efficiency observed in a market is strongly influenced by the degree of informational efficiency that exists in the same market. true false
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Financial theorists have identified two different types of efficiency in financial markets. the firs...
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