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Additional
efficient market hypothesis
Campbell R. Harvey's Hypertextual Finance Glossary
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Efficient Market Hypothesis
In general the hypothesis states that all relevant information is fully and immediately reflected in a
security's
market price thereby assuming that an
investor will obtain an equilibrium rate of
return
. In other words, an investor should not expect to earn an
abnormal return
(above the
market return)
through either
technical analysis
or
fundamental analysis
. Three forms of efficient market hypothesis exist:
weak form
(
stock
prices
reflect all information of past prices),
semi-strong form
(stock prices reflect all publicly available information) and
strong form
(stock prices reflect all relevant information including
insider
information).
Copyright © 2000,
Campbell R. Harvey
. All Rights Reserved.