The Efficient Market Hypothesis ( Emh ) Essay

838 Words Dec 3rd, 2015 4 Pages
The efficient markets had been defined as which would efficient in reflecting all relevant information in the perfect financial market.In 1970,the Efficient Market Hypothesis(EMH) was issued and developed by an economist named Eugene Fama. Although there are several researcher make an argument about this hypothesis with an doubtful attitude,it still appear to be significant in today’s capital market.At the same time,some hypothesis of EMH are made a lot of contribution for the capital market such as strong form.This essay set out to explain the characteristics of efficient market and then go on to introduce the efficient market including three versions. Moreover,the essay move to make a point about that the corporate manager will consider market anomalies to make decision under efficient markets hypothesis when capital market are efficient.Finally, making an argument about the existence of efficient market as well as when the investor facing the inefficient market, the influence for this situation will be shown.

There are three characteristics of the efficient market.The ideal index to perform the value of stock is price.Random walk implies that the price of stocks are unpredictable.If market efficiency,the stock prices will follow the random walk and all future outcomes are not influenced by previous outcomes.In addition,stock price also reflect all available information and all market participants have equal possess.According to the Efficient Market Hypothesis,stocks are…

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