12-2 market effiency - I ts whether its information is...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: I ts whether its information is efficient How quickly is information reflected in prices? Why should we even care the values of things decide what happened I ts the prices and values that determine what people do Prices are fundamental to understanding finance what determines prices I ts information changes the possible value of item Expected cash flow is based on information How well does price reflect information so its very fundamental its assumed when we learned the stuff earlier? How do we justify it? In an effect market you cannot consistently make money you can look to prices of thinks for guidance on how to make decisions so the idea is asking what is right what is wrong just look at the prices We must make money have positive npv and return greater than op cost You cannot consistently make money 3 kinds of effienciency weak form efficiency, semi-strong efficiency and strong form efficiency each is a nested subset of the other suppose Information is all historical in a weak form it is impossible to consistently make...
View Full Document

This note was uploaded on 01/15/2010 for the course FIN 357 taught by Professor Hadaway during the Fall '06 term at University of Texas at Austin.

Page1 / 3

12-2 market effiency - I ts whether its information is...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online