Answer (A) is correct. The efficient markets hypothesis (EMH) states that current stock prices immediately and fully reflect all relevant information. Hence, the market is continuously adjusting to new information and acting to correct pricing errors. Thus, the price of a security, which reflects an assessment of future cash flows, must equal the present value of those flows (NPV = 0) if the security is accurately priced. Furthermore, if all securities are accurately priced, every security has an NPV of $0, and all securities are therefore perfect substitutes.