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Efficient Market Hypothesis and Different Forms

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What the efficient market hypothesis? What are the different forms?

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This solution outlines the efficient market hypothesis and it's three different forms. Additionally, this solution includes one reference source for further research on the topic.

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The efficient market hypothesis (EMH) states that stocks are always in equilibrium and that it is impossible for investors to consistently "beat the market". A state of equilibrium, as far as securities are concerned occurs when the expected rate of return is just about equal to the required rate of return of the particular security.

The EMH theory is grounded on the premise that markets are generally efficient by virtue of the fact that there are many tens of ...

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