efficient-market hypothesis


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efficient-market hypothesis

the proposition that all available information which may influence the price of a FINANCIAL SECURITY is reflected in its current market price because financial markets are ‘efficient’ in adjusting prices to information. If markets are indeed efficient it is impossible for an investor to consistently predict how the price of any particular financial security is likely to change and thus outguess the market.
References in periodicals archive ?
This theory is consistent with the efficient-market hypothesis.
Second, the assumption that selling shares in a company will depress its share price is contrary to the efficient-market hypothesis, or at least involves a degree of circular reasoning.
is often considered the father of the efficient-market hypothesis.
Malkiel, for example, took apart Silver's efficient-market hypothesis.
On the Efficient-Market Hypothesis and stock exchange game model, Expert Systems with Applications 37(8): 5673-5681.
Event studies rest on the efficient-market hypothesis, which states that any event that affects the future profitability of a firm is immediately reflected in the firm's security prices.
Even the most ardent defenders of the efficient-market hypothesis were usually more subtle in their verbal presentations, but this nuance was glossed over owing to the primacy placed on the formal model for assessment.
Cohen, Polk, and Vuolteenaho measure the ability of the capital asset pricing model (CAPM) and the efficient-market hypothesis to explain the level of stock prices.
The arbitrage-free, efficient-market hypothesis implies [lnY.
The efficient-market hypothesis, which is also covered in the P3 syllabus (although it's more usually considered part of F3), suggests that most real markets are likely to be at least "semi-strong efficient".