Chapter 7, Problem 20Q

To determine

If advancement in information technology and internet let to the episode of stock market bubble and still adhere to the efficient market hypothesis.

Introduction:

Stock market bubble refers to the creation of price bubble in the stock market when the prices of stocks are derived far above their actual value due to various market forces.

Efficient market hypothesis states than the stock market cannot be beaten by a change (increase or decrease in value of stock) because the changes are themselves incorporated into the stock market and exhibit only the required information. So, it becomes impossible for stock market to outperform or underperform for a longer time period.