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efficient market hypothesis

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Can you please explain the meaning of efficient markets. Why might we expect markets to be efficient most of the time? In resent years, several securities firms have been guilty of using inside information when purchasing securities, thereby achieving returns well above the norm (even when accounting for risk). Does this suggest that the security markets are not efficient? can you explain this to me. thank you

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Solution Summary

This solution discusses whether insider trading affects the efficient market hypothesis.

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Markets are efficient when everyone has access to the same information, and so no one group of investors can consistently realize above average returns. In other words, the market price reflects all available information. The stock may ...

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