Efficient Market Theory: A Contradiction Of Terms
This is the first 1,000 characters of 765 words (3.06 pages) in the essay titled Efficient Market Theory: A Contradiction Of Terms
|Efficient Market Theory: A Contradiction Of Terms
According to the Efficient Market Theory, it should be extremely difficult for an investor to develop a "system" that consistently selects stocks that exhibit higher than normal returns over a period of time. It should also not be possible for a company to "cook the books" to misrepresent the value of stocks and bonds. An analysis of current literature, however, indicates that companies can and do "beat the system" and manipulate information to make stocks appear to perform above average. An understanding of the underlying inefficient "human" factors in the market equation is necessary in order to account for the flaw in Efficient Market Theory.
Efficient Market Theory: A Contradiction of Terms
Efficient Market Theory (EMT) is based on the premise that, given the efficiency of information technology and market dynamics, the value of the normal investment stock at any given time a...
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