The efficient Capital Markets By ding zhaoyong
The Efficient Capital Markets By Ding zhaoyong
Main contents The concept of efficient capital markets Alternative efficient market hypotheses The tests and results of emes The implication of EMHs
Main Contents • The concept of efficient capital markets • Alternative efficient market hypotheses • The tests and results of EMHs • The implication of EMHs
Efficient Capital Markets Efficient capital market is one in which security prices adjust rapidly to the arrival of new information and. therefore the current prices of securities reflect all information about the security. Efficient Market Hypotheses(EMi)are those alternative hypotheses which consider the efficiency of the markets
Efficient Capital Markets • Efficient capital market is one in which security prices adjust rapidly to the arrival of new information and, therefore, the current prices of securities reflect all information about the security. • Efficient Market Hypotheses (EMH ) are those alternative hypotheses which consider the efficiency of the markets
Efficient Capital Markets An efficient capital market imply A large number of competing profit maximizing participants analyze and value securities, each independently of the others New information regarding securities comes to the market in a random fashion, and the timing of one announcement is independent of others
Efficient Capital Markets • An efficient capital market imply: – A large number of competing profitmaximizing participants analyze and value securities, each independently of the others. – New information regarding securities comes to the market in a random fashion, and the timing of one announcement is independent of others
Efficient Capital Markets The competing investors attempt to adjust security prices rapidly to reflect the effect of new information, although imperfect and unbiased. The security prices that prevail at any times should be an un biased reflection of all currently available information. The expected returns implicit in the current price should reflect its risk
Efficient Capital Markets – The competing investors attempt to adjust security prices rapidly to reflect the effect of new information, although imperfect and unbiased. – The security prices that prevail at any times should be an unbiased reflection of all currently available information. The expected returns implicit in the current price should reflect its risk