Semi strong form implies that investors will not have

Info icon This preview shows pages 3–5. Sign up to view the full content.

View Full Document Right Arrow Icon
semi-strong form implies that investors will not have an advantage even after analyzing the public information because the market has already reflected in into the price (Kristoufek & Vosvrda, 2014). Strong-Form Efficiency Strong-form efficiency argues that all relevant information including which investors do not know is factored in the stock price. Therefore, price prediction cannot be improved even if the insider information is known (Poshakwale, 2015). Implications for Corporate Finance In the efficient capital market, information is reflected in security prices quickly, and investors have little time to act on it thus obtaining a standard rate of return (Ehrhardt & Brigham, 2016). Again firms receive fair value for securities they sell hence opportunities created through fooling investors are not available in efficient capital markets. It is worth noting that, the efficient financial hypothesis has some implications for corporate finance. One, a business can sell many shares as it desires without lowering prices. Second, financial
Image of page 3

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

View Full Document Right Arrow Icon
4 CAPITAL MARKET managers cannot predict when to issue stocks using publicly available information and third, the business stock price cannot be affected by a change in the business accounting (Arrfelt et al, 2015).
Image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern