All businesses need to raise finance to run a business

Jun 27th, 2015
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Abilene Christian University
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Definition The Efficient Market Hypothesis (EMH) is a controversial theory that states thatsecurity prices reflect all available information, making it fruitless to pick stocks (this is, to analyze stock in an attempt to select some that may return more than the rest). Stock picking takes, in the best of cases, a lot of work to be just feebly fruitful, so there are probably better things to do with our resources The rationale behind this is that the plentiful well-informed motivated professionals that work in the financial markets allegedly form an efficient system for assigning each security the most adequate price, given the available information. Therefore, no individuals can outsmart this fabulous group and beat the market by regularly buying securities at prices that are lower than what they should be.

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The Efficient Market Hypothesis (EMH): Definition and Practical ImplicationsSECTIONSDefinition|Weak, Semi-Strong and Strong EMH|ImplicationsDefinitionTheEfficient Market Hypothesis (EMH)is a controversial theory that states thatsecurity prices reflect all available information, making it fruitless to pick stocks(this is, to analyze stock in an attempt to select some that mayreturnmore than the rest).Stock picking takes, in the best of cases, a lot of work to be just feebly fruitful, so there are probably better things to do with our resourcesThe rationale behind this is that the plentiful well-informed motivated professionals that work in the financial markets allegedly form an efficient system for assigning each security themost adequate price, given the available information. Therefore, no individuals can outsmart this fabulous group andbeat the marketby regularly buying securities at prices that are lower than what they should be.Put in other words, the hypothesis is saying that no stock trades too cheaply or too expensively; hence, it would be useless to select which ones to buy or sell. According to the EMH, the reason for this perfect pricing is that, if one stock happens to be trading even just a bit too cheaply (or too costly), then its demand increases (or decreases), rapidly moving the price to its most reasonable value.This sounds against ordinary wisdom, as we have all heard stories of successful stock picking by keen traders. So

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