Efficient Market Hypothesis (EMH)
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Efficient Market Hypothesis (EMH)
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Efficient Market Hypothesis (EMH). In a 1–2-page assessment, explain the Efficient Market Hypothesis and its implications on financial decisions.
Your assessment will focus on an interesting theoretical concept called the Efficient Markets Hypothesis (EMH). This concept tries to provide adequate answers to such questions as, “Are stocks in equilibrium?” and “Is it possible for an investor to consistently ‘beat the market’ without any inside information?”
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By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:
• Competency 1. Maximize shareholder wealth.
o Explain the Efficient Markets Hypothesis (EHM).
• Competency 4. Evaluate optimal capital structure.
o Compare the three levels of market efficiency.
o Explain the implications of the EMH on financial decisions.
Efficient Market Hypothesis (EMH)
Order 100% plagiarism free essay on efficient market hypothesis
Required Resources
The following resources are required to complete the assessment.
Malkiel, B. G. (1989). Is the stock market efficient? Science, 243(4896), 1313–1318.
o Malkiel is a seminal, foundational author in the field. Everything you read about the Efficient Market Hypothesis will refer back to this fundamental explanation of the EMH theory. As you read this article, pay particular attention to the three levels of market efficiency to help you prepare for your assessment.
The following e-books or articles from the Capella University Library are linked directly in this course:
• Downes, J., & Goodman, J. E. (2014). Dictionary of finance and investment terms (9th ed.). Hauppague, NY: Barron’s.
• Brigham, E. F., & Houston, J. F. (2016). Fundamentals of financial management (14th ed.). Boston, MA: Cengage.
Efficient Market Hypothesis (EMH)
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Assessment Instructions
Read the 1989 Malkiel article, “Is the Stock Market Efficient,” linked in the Resources. In addition, conduct research in the Capella library or the Internet on different perspectives on the Efficient Market Hypothesis. You might try using search terms such as “efficient market hypothesis controversy” and “efficient market hypothesis perspectives” to obtain relevant results.
Use your research to complete the following:
• Explain the Efficient Markets Hypothesis (EMH).
• Distinguish among the three levels of market efficiency.
• Briefly explain the implications of the EMH on financial decisions by individual investors.
Use at least two research resources to support your ideas.
Additional Requirements
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