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The efficient-market hypothesis (EMH) [a] is a hypothesis in financial economics that states that asset prices reflect all available information. A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted basis since market prices should only react to new information.
The Grossman-Stiglitz Paradox is a paradox introduced by Sanford J. Grossman and Joseph Stiglitz in a joint publication in American Economic Review in 1980 [1] that argues perfectly informationally efficient markets are an impossibility since, if prices perfectly reflected available information, there is no profit to gathering information, in which case there would be little reason to trade ...
In the 1970s Eugene Fama defined an efficient financial market as "one in which prices always fully reflect available information". [3] Fama identified three levels of market efficiency: 1. Weak-form efficiency. Prices of the securities instantly and fully reflect all information of the past prices. This means future price movements cannot be ...
Efficient market theory, or hypothesis, holds that a security's price reflects all relevant and known information about that asset. One upshot of this theory is that, on a risk-adjusted basis, you ...
Late last month, Robert Shiller stopped by Motley Fool Headquarters for an hour-long interview about housing, stocks, bubbles, and more. A Yale professor who just published his 10th book, Finance ...
[citation needed] Market efficiency denotes how information is factored in price, Fama (1970) emphasizes that the hypothesis of market efficiency must be tested in the context of expected returns. The joint hypothesis problem states that when a model yields a predicted return significantly different from the actual return, one can never be ...
The joint hypothesis problem is the problem that testing for market efficiency is difficult, or even impossible. Any attempts to test for market (in)efficiency must involve asset pricing models so that there are expected returns to compare to real returns. It is not possible to measure 'abnormal' returns without expected returns predicted by ...
A form of government where the monarch is elected, a modern example being the King of Cambodia, who is chosen by the Royal Council of the Throne; Vatican City is also often considered a modern elective monarchy. Self-proclaimed monarchy: A form of government where the monarch claims a monarch title without a nexus to the previous monarch dynasty.