Explanation

An efficient market is best described by option B: "consistent, superior, risk-adjusted returns, net of all expenses, cannot be achieved."

Key Concepts:

1. Efficient Market Hypothesis (EMH): The EMH states that security prices fully reflect all available information. In an efficient market, it's impossible to consistently achieve above-average returns on a risk-adjusted basis after accounting for transaction costs and taxes.

2. Why Option B is correct:

   • In an efficient market, prices adjust rapidly to new information
   • Any attempt to outperform the market through active management would be offset by transaction costs and expenses
   • Superior risk-adjusted returns cannot be consistently achieved

3. Why other options are incorrect:

   • Option A: In efficient markets, passive strategies (like index funds) are typically preferred because they have lower costs and often outperform active strategies after expenses
   • Option C: In efficient markets, price adjustments to new information occur rapidly, preventing many traders from profiting from the information

Additional Context:

• Efficient markets don't mean prices are always "correct" but that they reflect all available information
• The degree of market efficiency varies across markets and over time
• Three forms of market efficiency exist: weak form, semi-strong form, and strong form

This question tests understanding of the fundamental concept of market efficiency in portfolio management.