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A large number of competing investors is necessary for market efficiency because:
I). it creates independent and random price changes.
II). it results in faster price adjustment.
III). information is more fully examined and acted upon.
A. I, II and III.
B. II and III.
C. I and II.
Answer: A
Explanation:
Markets become efficient due to a high degree of competition in the markets. Competition is higher with more participants, who examine and act on new information. Also, a higher level of competition will result in faster decisions and therefore faster price adjustment.

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