What principle does the efficient market hypothesis (EMH) convey?

The efficient market hypothesis (EMH) conveys the principle that asset prices reflect all available information. This means that in an efficient market, it is impossible for investors to consistently achieve returns that exceed average market returns on a risk-adjusted basis, since any new information that could impact a stock's price is quickly incorporated into its market price. This concept emphasizes that price movements are based on all known information, suggesting that any potential opportunities for arbitrage or excess profits are only temporary, as they will quickly be recognized and acted upon by investors, resulting in price adjustments that eliminate those opportunities.

This principle underlies the idea that it is challenging to "beat the market" through stock selection or market timing strategies, as all relevant information is already accounted for in the current prices. The other options suggest ideas that either contradict or misunderstand this core concept of EMH, such as claiming markets are inefficient or driven solely by speculation, which are not foundational tenets of the hypothesis.