Class 10

Class 10 - Strong form: • Even private information (all...

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Ch. 7: Markets Efficient market: o Orderly price formation process o Price reflects the relevant information “out there” Fully Immediately o What is meant by available/ relevant information? Semi-strong form: All public information is impounded in the common price Weak form: All information in past price/ volume trends is already impounded in current price Thus, you can’t predict future prices by looking at past price information
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Unformatted text preview: Strong form: • Even private information (all information) is already impounded into prices • Why do we need efficiency: o Competition • “Insider”: o Corporate manager o Anyone who obtains information from an insider becomes an insider o Insiders must either abstain from trading that particular stock...
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This note was uploaded on 06/11/2011 for the course BUSI 408 taught by Professor Croce during the Spring '08 term at UNC.

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