Market 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.
[...] Next let's assume that markets are strongly efficient, homogenous information is readily available to everyone, investors are on an equal playing field, and prices are where they should be. The capital asset pricing model works very well in this case. Risk can be assessed accurately and investors are able to determine how much return they require for their risk. Through these two examples it is clear how important a role market efficiency plays on the capital asset pricing model. In my opinion, market efficiency is a real thing in the semi-strong form. [...]
[...] Why I Think Markets are Efficient Market 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. [...]
APA Style reference
For your bibliographyOnline reading
with our online readerContent validated
by our reading committee
