A market in which security prices reflect all available information and adjust instantly to any new information. If the security markets are truly efficient, it is not possible for an investor consistently to outperform stock market averages such as the S&P 500 except by acquiring more risky securities. Significant evidence supports the premise that security markets are very efficient. Also called market efficiency. See also random-walk hypothesis, strong form, weak form.
Main Entry: ef·fi·cient market Function: noun : a securities and commodities market whose prices always reflect the most accurate and up-to-date information —compare FRAUD ON THE MARKET THEORY
