efficient market hypothesis
efficient market hypothesis
Finance dictionary of financial terms
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Economics and finance
Definition of efficient market hypothesis
efficient market hypothesis: Theory describing the behaviour of an assumed “perfect” market in which securities are typically in equilibrium, security prices fully reflect all public information available and react swiftly to new information, and, since stocks are fairly priced, investors need not waste time looking for mispriced securities. A market that allocates funds to their most productive uses as a result of competition among wealth-maximizing investors that determines and publicizes prices that are believed to be close to their true value. An assumed “perfect” market in which there are many small investors, each having the same information and expectations with respect to securities, there are no restrictions on investment, no taxes, and no transaction costs, and all investors are rational, they view securities similarly, and they are risk-averse, preferring higher returns and lower risk.
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Finance dictionary of financial terms
Finance dictionary of financial terms index
Definition and meaning of efficient market hypothesis
Meaning of efficient market hypothesis
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