Efficient Market Hypothesis and Behavioural Finance

Efficient Market Hypothesis The efficient market hypothesis (EMH) is a belief that financial asset markets are fully efficient and thus correctly reflect all information. It evolved in the wake of work by Kendall (1953). He found price seemed to follow random walks, so that future price changes could not be predicted on the basis of past prices. The importance of news for asset prices led to the idea of the EMH. Definition The efficient markets hypothesis (…

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