17th October 2019


What does it mean to have an efficient market?

The efficient market hypothesis (EMH) is an investment theory that states it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information.

Accordingly, what does it mean for a stock market to be efficient?

Market efficiency refers to the degree to which stock prices and other securities prices reflect all available, relevant information. Investors who agree with this statement tend to buy index funds that track overall market performance and are proponents of passive portfolio management.

What are three forms of market efficiency?

Efficient-market hypothesis. There are three variants of the hypothesis: "weak", "semi-strong", and "strong" form. The weak form of the EMH claims that prices on traded assets (e.g., stocks, bonds, or property) already reflect all past publicly available information.

Who came up with the efficient market hypothesis?

Eugene Fama
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