SNHU Insider Information Disrupts Market Efficiency Discussion

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yfunec1954

Business Finance

Southern New Hampshire University

Question Description

Help me study for my Business class. I’m stuck and don’t understand.

Efficient markets are defined as those in which security prices reflect all available information. Some investors have more information than others (legally and illegally), which may be due to the amount of research they do and time they spend. In other cases, investors may have nonpublic information; for example, an executive may have inside information. How can someone with inside information disrupt efficient markets? What measures can/should be taken to stop these disruptions?

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Explanation & Answer

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Business Discussion

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How Insider information disrupts market efficiency
Market efficiency is defined as the situation whereby the information of an item is
reflected by its price. Researchers explain that maintaining a consistent and stable market on
a risk-adjusted basis is impossible since most market prices are ...

PuevfYnoerGhgbe (34462)
Purdue University

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