Efficient Market Hypothesis
The book discusses the Efficient Market Hypothesis (EMH) and its three forms. The EMH has a lot to do with information and stock prices.
- How does information get into prices?
- How do we know if prices reflect all available information?
- What are abnormal returns?
- What does the EMH have to say about abnormal returns?
We all remember the story about Martha Stewart, who was accused of insider trading. If not, take a moment to research this incident, then answer the following:
- Why is it illegal to trade stocks based on inside information?
- Other than Martha Stewart, provide an example of someone who was trading stocks on inside information.
200 WORDS EACH MIN.