Efficient Capital Markets Random walk hypothesis the notion that stock prices changes are random and unpredictable Dealing with price movement over time Efficient market hypothesis the notion that stock prices already fully reflect all available information The fair game model( specified time)
Efficient Capital Markets • Random walk hypothesis – the notion that stock prices changes are random and unpredictable. – Dealing with price movement over time • Efficient market hypothesis – the notion that stock prices already fully reflect all available information. – The fair game model( specified time)
Efficient Capital Markets Investors will have an incentive to spend time and resources to analyze and uncover new information only if such activity is likely to generate high returns Competition among many well-backed, highly paid, aggressive analysts ensure stock prices ought to reflect available information regarding their proper levels
Efficient Capital Markets • Investors will have an incentive to spend time and resources to analyze and uncover new information only if such activity is likely to generate high returns • Competition among many well-backed, highly paid, aggressive analysts ensure stock prices ought to reflect available information regarding their proper levels