Asked by Jalon Williams on Apr 25, 2024
Your classmate just made $10,000 in a single day by trading in the stock market. It is reasonable to conclude, therefore, that the efficient market hypothesis cannot be true.
Efficient Market Hypothesis
The theory that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns than the overall market.
Stock Market
A public marketplace for buying, selling, and issuing shares of publicly held companies; facilitates economic transactions and information exchange regarding stock prices and company performance.
- Understand the concept of market efficiency and its consequences for the valuation of stocks and the development of investment strategies.
Learning Objectives
- Understand the concept of market efficiency and its consequences for the valuation of stocks and the development of investment strategies.