The correct answer is: B. information.
An efficient market is a market in which asset prices reflect all available information. This means that there are no opportunities for investors to make abnormal profits by trading on information that is not already reflected in prices.
There are three main types of market efficiency: weak, semi-strong, and strong.
- Weak-form efficiency states that asset prices reflect all historical information. This means that it is not possible to make abnormal profits by studying past prices.
- Semi-strong efficiency states that asset prices reflect all publicly available information. This means that it is not possible to make abnormal profits by studying news reports, company financial statements, or other publicly available information.
- Strong-form efficiency states that asset prices reflect all information, both public and private. This means that it is not possible to make abnormal profits by using any information, even information that is not publicly available.
The efficient markets hypothesis (EMH) is the theory that asset prices reflect all available information. The EMH is based on the assumption that markets are efficient, and that prices reflect all available information. This means that it is not possible to make abnormal profits by trading on information that is not already reflected in prices.
The EMH has been the subject of much debate and research. Some studies have found evidence to support the EMH, while others have found evidence to contradict it. The EMH is a complex theory, and there is no consensus among economists on whether or not it is correct.
Regardless of whether or not the EMH is correct, it is an important concept in finance. The EMH is the foundation for many financial theories and models, and it is used by investors to make decisions about where to invest their money.
The other options are incorrect because they are not central issues of efficient markets.
- Regulations are rules that are put in place by governments to control the financial markets. Regulations are designed to protect investors and to ensure that markets are fair and orderly. However, regulations do not affect the efficiency of markets.
- Participants are the people who trade in financial markets. Participants include individuals, businesses, and governments. The types of participants in a market can affect the efficiency of the market, but they are not the central issue of efficient markets.
- Structure refers to the way that a market is organized. The structure of a market can affect the efficiency of the market, but it is not the central issue of efficient markets.