PPT-The Efficient Market Hypothesis

Bodie Kane and Marcus Essentials of Investments 9 th Global Edition 8 81 Random Walks and Efficient Market Hypothesis Random Walk Notion that stock price changes are random Efficient Market Hypothesis EMH. Lo To appear in L Blume and S Durlauf The New Palgrave A Dictionary of Economics Second Edition 2007 New York Palgrave McMillan The efficient markets hypothesis EMH maintains that market prices fully reflect all available information Devel Dr. M. . Kashif. Lecture Preview. Expectations are very important in our financial system.. Expectations of returns, risk, and liquidity impact asset demand. Inflationary expectations impact bond prices. 6. Bodie, Kane, and Marcus. Essentials of Investments, . 9. th. Edition. 6.1 Diversification and Portfolio Risk. Market/Systematic/Nondiversifiable Risk. Risk factors common to whole economy. Unique/Firm-Specific/Nonsystematic/ Diversifiable Risk. Agenda. How to add value in financing. Intro to the EMH. Types of Efficiency. Misconceptions. Valuation. Financing Opportunities. While many companies find that there are a lot of NPV-positive (profitable) projects out there, there are very few financing opportunities that are NPV -positive.. Baseline (Flightpath D): To be able to . state that the stomach contains acid, state that the liver produces bile and write a simple hypothesis and prediction.. Further (Flightpath C&B ): To be able to . Markets. (chapter . 12 Jones). Efficient Markets. How well do markets respond to new information?. Should it be possible to decide between a profitable and unprofitable investment given current information?. Externalities, Environmental Policy, and Public Goods. Copyright © 2017 Pearson Education, Inc. All Rights . Reserved. Chapter Outline. 5.1 . Externalities and Economic Efficiency. 5.2 . Private Solutions to Externalities: The . Hwk. due by midnight. Wed 2/7: Online Quiz (Chap 4-5) due by 2:29pm. In-class Midterm Review – Jeopardy. Mon 2/12: MID-TERM. Figure 4.6 Economic Surplus Equals the Sum of Consumer Surplus and Producer Surplus. FIN 352 – Professor Dow. What do we mean by “efficiency”?. Common meaning: Markets always get things right.. Economic: Markets allocate resources to their most efficient uses.. Financial: Markets are . think . we know about markets. Prof. Dr. Oliver . Spalt. spalt@uni-mannheim.de. Why are markets good?. 2. The Classical Answer . Classical economic position is that “markets are good”. They efficiently allocate risks and resources. &. . Energy efficiency Data Protocol and Portal (. EeDaPP. ). &. Energy efficient Mortgage Market Implementation Plan (. EeMMIP. ). In the EU 2. 7. there are… . Bring Energy Efficiency to the EU buildings stock: . Introduction. Random walk hypothesis . The . efficient market hypothesis (EMH) . is an idea partly developed in the 1960s by Eugene . Fama. . . It is . an investment theory that states it is impossible to "beat the market" . Role of Expectations. Expectations are important in every sector . and market in the economy. . 1. Asset demand and the determination of . i. 2. Risk and term structure of . i. 3. Asymmetric information and financial structure. Giorgio Monti . Tilburg Law and Economics Center. G.Monti@tilburguniversity.edu. . Elements of judicial style under discussion. Mechanisms for overruling/departing from settled case-law. Paragraphs with general principles.