Meket efficiency refers to the degree to which information is avialable to all the participants of the market which provides maximum possiblility to the buyers and the sellers to do the transactions at a much lower transaction cost.
The three form that efficient market can take are :
a . Weak form : In this form of market the public and the private information about the market are not available to the investers neither it is incorporated in the current stock price. Only the historical price information is available which cannot be considered as a base to predict the future price of the market.
b. Semi strong: In this form of market along with the historical price the public information is available to the investors and is incorporated to the current price of the stock. But however the public information is also not sufficient to make the traders predict the future prices.
c. Strong : In this form of market both public as well as private market information is available and the information is incorporated in the current price of the stock. But however, even if the information is available no investors can make abnormal profit than the average investor over the time.
I donot agree with the Efficient market hypothesis theory. Firstly no past information can predict the price of the future. The future can be predicted from the information that is available today. The price of tomorrow will be same as today untill some new information arrives causing it to change. But if we can predict the arrival of the new information it is no longer new.
Secondly, under EMH it is considered that no investor can be more profitable than the average investor having the same investmenr that means both will have same returns which means no investor will have a clear advantage over the other. But if this happens there will be no range of yealy returns in the mutual fund industry and if one investor makes profit the entire universe of investor would make the same profit. This cannot be possible.
“Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!”
What Students Are Saying About Us
.......... Customer ID: 12*** | Rating: ⭐⭐⭐⭐⭐"Honestly, I was afraid to send my paper to you, but splendidwritings.com proved they are a trustworthy service. My essay was done in less than a day, and I received a brilliant piece. I didn’t even believe it was my essay at first 🙂 Great job, thank you!"
.......... Customer ID: 14***| Rating: ⭐⭐⭐⭐⭐
"The company has some nice prices and good content. I ordered a term paper here and got a very good one. I'll keep ordering from this website."
