Which of the following reflects market efficiency?

Market efficiency refers to the degree to which asset prices fully reflect all available information. The correct choice emphasizes that information is incorporated into asset prices quickly, which is a fundamental principle of the Efficient Market Hypothesis (EMH). In an efficient market, as new information becomes available—whether it's economic news, earnings reports, or other relevant updates—prices adjust rapidly to reflect that information. This ensures that no investor can consistently achieve returns that outperform the market average without taking on additional risk, as any opportunity for arbitrage would typically be exploited quickly by other market participants.

This interconnected nature of information and pricing is a hallmark of an efficient market. In contrast, other options suggest scenarios that are contrary to the principles of market efficiency, such as stagnating prices in response to news or the belief that investors can always achieve above-average returns, which would imply inefficiencies and the presence of mispriced assets. Trading costs, while relevant to profitability and strategy, do not relate to the concept of market efficiency directly.