The efficient market hypothesis implies that?

The efficient market hypothesis (EMH) suggests that current asset prices fully reflect all available information. This means that stocks and securities are priced in a way that incorporates all relevant data and news, making it impossible for investors to consistently achieve higher returns than the average market return, assuming they are using this information.

Under this hypothesis, because all available information is already accounted for in the stock prices, it becomes extremely challenging for investors to find undervalued or overvalued stocks. This does not imply that prices increase or decrease in a consistent or predictable manner; rather, price movements are based on the flow of news and information which is processed by market participants almost instantaneously.

This principle leads to the conclusion that trying to outperform the market by using past price information (as suggested by technical analysis) or evaluating financial statements to pick stocks (as suggested by fundamental analysis) is unlikely to yield consistent returns superior to simply investing in the market index. Therefore, the correct interpretation of the EMH is that current prices reflect all useful information, aligning perfectly with option D.