Week 11 - Implications for Investors Flashcards
(5 cards)
1
Q
What is the first implication?
A
The quoted prices are correct
2
Q
What is the second implication?
A
All available information is accounted for in the quoted price
3
Q
What is the third implication?
A
If you think a price is incorrect, you must believe you have information or an interpretation of information that nobody else has spotted
4
Q
Normally, performance of a security is…
A
Unpredictable
5
Q
What is the MAIN implication of the efficient market hypothesis?
A
Market is efficient - shares prices are correctly priced. You cannot deduce anything or predict the share prices correctly
