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Equity InvestmentsModule 3 of 6

Market Efficiency

6

Concepts

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Formulas

1

Decisions

2

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Key Concepts

6 concepts covered in this module.

Efficient Market Hypothesis (EMH)

Security prices fully reflect all available information. Prices adjust rapidly to new information.

Weak Form

Prices reflect all past market data. Technical analysis cannot earn excess returns.

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Decision Frameworks

1 decision frameworks to guide your analysis.

Implications for investment strategy?

  • Weak efficient: fundamental analysis can work, but not technical
  • Semi-strong: only insider info gives edge; use passive strategies
  • Strong efficient: no analysis adds value; index everything

Mind Map

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Efficient Market Hypothesis (EMH)

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Answer
Security prices fully reflect all available information. Prices adjust rapidly to new information.
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Overview of Equity Securities