Lesson 4: Efficient Markets Hypothesis (EMH)

Question 1

Efficient Market Hypothesis

Answer 1

states it is impossible / difficult to beat the stock market

Question 2

3 forms of EMH

Answer 2

1. weak form efficiency: prices reflect information contained in past prices, it is not possible to profit based on past price
2. Semi - strong form efficiency: prices reflect publicly available information, it is not possible to profit based on public information
3. Strong form efficiency: prices reflect private infor -> impossible to beat the market except = luck

Question 3

Implications of EMH