Why I Think Markets are Efficient
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document in english
finance
presentation
published 04/09/2007
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level : Advanced
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SummaryMarket efficiency, discovered by Eugene Fama, is the theory that at any given time, the prices of the market fully reflect all available information on a particular stock or and/or the market. Therefore no individual investor has any advantage over any other as all information is shared by everyone. This is known as the efficient market hypothesis, and is very controversial. I assert that markets are efficient in a semi strong form, and argue against people that believe otherwise.
Table of Contents
- The efficient market hypothesis breaks market efficiency into three categories
- The predictions and valuation of stocks has a direct effect on the capital asset pricing model
- In order for this compensation to be accurately judged into the future, risk must be assessed
- There are several valid arguments against market efficiency
- There is no clear cut correct answer to the efficient market hypothesis and there is no way for anyone to say which is absolutely correct
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