Chapter 4
Hypothesis of Informational Efficiency of Financial Markets
Abstract
Price reflects the information available on the market. Markets are different in their abilities to process information. If the market is efficient, there is a lack of motivation for investors to process information.
Keywords
weak form
strong form
semieffective form
behavioral finance
coherent market
4.1. Efficient market
An efficient capital market is when:
1. The price of securities bought and sold reflects all relevant information. Share prices change immediately to reflect new information.
2. There is competition in the market (lack of concentration) ...
Get Finance now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
