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Efficient Markets Theory |
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Efficient markets theory (EMT) Efficient Markets Theory A controversial model on how markets work. It states that the market efficiently deals with all information on a given security and reflects it in the price immediately. The model holds that technical analysis, fundamental analysis, and any speculative investing based on them are useless. The model has three forms: weak efficiency, which holds that technical analysis is ineffective; semi-strong efficiency, which holds that fundamental analysis is ineffective; and strong efficiency, which states that even insider information is immediately reflected in the security prices. Investors and academics disagree on how well the model works. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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For readers familiar with the Efficient Markets Theory, a prediction market is actually an "efficient" market in the "strong form" of the theory. |
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