Econ 210 - Assn 5-1 - Econ 210 - Assn 5-1 Assignment 5-1...

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Econ 210 - Assn 5-1 Assignment 5-1 ECON 210
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What Causes Market Inefficiency? When market prices or current prices of marketable securities don't match the available information of the marketable securities, market inefficiency will occur. There is a lot of different factors that play a part in prices being over or understated of where they should be. "Thus, in an inefficient market, some securities will be overpriced and others will be underpriced, which means some investors can make excess returns while others can lose more than warranted by their level of risk exposure." (investopedia.com). A good example of this that can cause market inefficiency do to information not matching the market conditions is insider trading, or information that is somehow obtained by an individual before others do. "Many investors attempt to use a market inefficiency to their advantage. Famed investor Warren Buffet claims to have accumulated his fortune as a result of market inefficiency. In regards to market inefficiency," Warren Buffet has stated, "I'd be a bum
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Econ 210 - Assn 5-1 - Econ 210 - Assn 5-1 Assignment 5-1...

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