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    Three Forms of Market Efficiency, Preferred Stock

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    Define the three forms of market efficiency.

    What is preferred stock? Do you think it's more like debt or equity? Please provide one reason for your answer.

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    The three forms of market efficiency are operational efficiency, allocation efficiency, and pricing efficiency. Operational efficiency refers to the cost to buyers and sellers of transactions in securities on the exchange. Basically, the lower the cost for the market to operate, the higher the operational efficiency. As the name implies, allocation efficiency refers to how well limited resources are ...

    Solution Summary

    The solution defines three forms of market efficiency and describes what is preferred stock.