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What is an efficient market?

An efficient market is one in which any change in available information will be reflected in the company's stock price ____ Match each information type to the form of market efficiency that identifies that type of information as being quickly and accurately reflected in stock prices.

What are the implications of market efficiency?

Some Implications of Market Efficiency (continued) zIf financial markets are efficient, then there is no “best time” to purchase an asset. Apparent past price patterns are not predictive for future prices. zIf financial markets are efficient, asset price changes are serially random.

Should passive index investors invest in an efficient market?

An efficient market would benefit passive index investors most. This principle is called the Efficient Market Hypothesis (EMH), which asserts that the market is able to correctly price securities in a timely manner based on the latest information available.

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