What is the efficient markets hypothesis, and how does it relate to random walks?

Question

03-01-2020
Business

contestada

What is the efficient markets hypothesis, and how does it relate to random walks?

Respuesta :

Otras preguntas

Sangita has deposited rs 1,00,000 in a commercial bank for 2 years at the rate of rs 5 interest per annum for rs 100. The ages of her elder daughter and younger

When the general level of prices increases over time, it is known as __________. a.) inflation b.) opportunity cost c.) nominal interest rate d.) deflat

how do I solve it I’ve been struggling for a little bit for mow

Hey Dante! To find the maximum possible area of the corral, we'll use the available 760 feet of fencing. Since one side is already the creek, we only need to fe

how do I solve it I’ve been struggling for a little bit for mow

In a heptagon, the degree measures of the interior angles are $x, ~x, ~x-2, ~x-2, ~x + 2, ~x + 2$ and $x + 4$ degrees. What is the degree measure of the largest

what were the long term causes of the war of independence

What is the next number 6,12,15,60,65,?

Owen answered a set of math and history Quiz Bowl questions. Owen correctly answered of all the questions. However, Owen answered of the math questi

rdsegoe rdsegoe · Answer 1 · 2020-01-03T17:00:18+01:00

Answer: Answer is in Explanation below

Explanation: The efficient market hypothesis expresses that assets such as share prices are set to reflect all the information available. This means that the prices found in the markets only respond to new information.

A random walk states that share market prices change randomly. This means that the prices cannot be forecasted. This financial theory makes it consistent with the efficient market hypothesis, as these prices are set based on available information, and only change when new info is introduced into the market. Investors do not have a say in what the price should be, and cannot claim that the share price is over or undervalued.