Efficient Market Hypothesis

Efficient Market Hypothesis: As the term suggests, efficient market hypothesis is a situation that affirms presence of all important information in the financial market which can probably influence any particular share price or financial security that makes for a good competition in the financial market.
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In this scenario both buyers and sellers have perfect information about the market and neither of the two parties hold any piece of information that is not known to the other.

Being a controversial and disputed theory, experts feel it is not possible to have all the knowledge of the market with the help of any analysis or assessment. However, believers feel that it is a useful market tool that can be easily used as present stock prices information is readily available, expectation or analysis on future prices can be done at random. Efficient market hypothesis forms an important crux of modern economics.

Edited and Updated 15th February 2014

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