asks how such a divergence between stock prices and underlying economic fun-
damentals could result. Clues are provided by recent discoveries of accounting
fraud and other corporate malfeasance at leading high-tech companies. In the
late-1990s, at least some leading corporations failed to provide investors with
accurate operating information. In other instances, unscrupulous stock promoters
and basic gaps in understanding about the risks and potential rewards of tech
stock investing led investors to pay exorbitant prices.
I.EFFICIENT MARKET HYPOTHESIS
The efficient market hypothesis states that security prices fully reflect all avail-
able information. ...
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