Unformatted text preview: 600 million shares were traded. No apparent fundamental can explain it. Explanations: 1. noise traders - overreact to good or bad news 2. bubbles - self-fulfilling departures from fundamentals which continue until, for some reason, the conditions for self-fulfillment disappear 3. trading mechanisms - large sell orders overwhelmed the spets who match buyers and sellers for individual stocks Costs of Inefficiency 1. excessive price fluctuations which do not reflect shifts in fundamental value 2. resources spent obtaining the information missing from market prices...
View Full Document
This note was uploaded on 11/22/2011 for the course FIN FIN1100 taught by Professor Bradrifkin during the Fall '09 term at Broward College.
- Fall '09
- Personal Finance