Asked Oct 22, 2019

What are the three forms of Efficient MArket Hypothesis and what are the criticisms of each from the empirical literature in the text?


Expert Answer

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Step 1

The Efficient Market Hypothesis means that the market investors have an entree to all information obtainable in the market. The accessibility of information will lead to re-modifying of prices of shares .If the price of shares re-modifies themselves then not any of the investors will be capable to take benefit of the alteration in price as the market information is well-known to all. There is no particular group of investors that can attempt to take benefit of any particular information available to them.

Step 2

The three forms of Efficient Market Hypothesis is as follows:

Strong form:

Strong form of Efficient Market Hypothesis deals that the prices of stocks re-modified itself immediately. The re-modifying of the share price is also immediate.

Semi-strong form:

Semi strong form of Efficient Market Hypothesis deals that the price of shares re-modified itself but it is...

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