|Efficient Market Hypothesis|
Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
Main Page: finance, tax advisor, financial, accounting, credit, inventory, financial advisor, business,
Definition of Efficient Market Hypothesis
Efficient Market Hypothesis
In general the hypothesis states that all relevant information is fully and
The hypothesis that securities are typically in equilibrium--that they are fairly priced in the sense that the price reflects all publicly available information on the security.
Reflects the relative amount of wealth wasted in making transactions. An efficient
Belief that an effort to keep unemployment below its natural rate results in an accelerating inflation.
markets in which the prevailing price is determined through the free interaction of
Any market in which prices are in a declining trend.
A market in which stock or bond prices are generally
A prolonged period of falling stock market prices.
A measurement of the extent to which the returns on a given stock move with stock market.
An illegal market.
A market where an intermediary offers search services to buyers and sellers.
Any market in which prices are in an upward trend.
A market in which stock or bond prices are generally rising.
A prolonged period of rising stock market prices.
The foreign market in the United Kingdom.
The market for trading long-term debt instruments (those that mature in more than one year).
The market in which investors buy and sell shares of companies, normally associated with a Stock Exchange.
A market that specializes in trading long-term, relatively high risk
The market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than one year) bonds and stocks are traded.
Capital market imperfections view
The view that issuing debt is generally valuable but that the firm's
Capital market line (CML)
The line defined by every combination of the risk-free asset and the market portfolio.
markets for long-term financing.
Also called spot markets, these are markets that involve the immediate delivery of a security
coefficient of correlation
a measure of dispersion that indicates the degree of relative association existing between two variables
Coefficient of determination
A measure of the goodness of fit of the relationship between the dependent and
coefficient of determination
a measure of dispersion that
coefficient of variation
a measure of risk used when the standard deviations for multiple projects are approximately
An agreement between two or more countries that permits the free movement of capital
Common stock market
The market for trading equities, not including preferred stock.
Complete capital market
A market in which there is a distinct marketable security for each and every
Corner A Market
To purchase enough of the available supply of a commodity or stock in order to
A standardized statistical measure of the dependence of two random variables,
A measure of the tendency of two variables to change values
A statistic in which the covariance is scaled to a
A market where traders specializing in particular commodities buy and sell assets for their
The market for trading debt instruments.
markets for derivative instruments.
Direct search market
Buyers and sellers seek each other directly and transact directly.
DLOM (discount for lack of marketability)
an amount or percentage deducted from an equity interest to reflect lack of marketability.
Part of a nation's internal market representing the mechanisms for issuing and trading
Efficient capital market
A market in which new information is very quickly reflected accurately in share
efficient capital markets
Financial markets in which security prices rapidly reflect all relevant information about asset values.
The organizing principle of modern portfolio theory, which maintains that any riskaverse
The combinations of securities portfolios that maximize expected return for any level of
A graph representing a set of portfolios that maximizes
A portfolio that provides the greatest expected return for a given level of risk (i.e. standard
In the interbank Eurodollar deposit market, an either-way market is one in which the bid
The financial markets of developing economies.
Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the
The money market for borrowing and lending currencies that are held in the form of
Excess return on the market portfolio
The difference between the return on the market portfolio and the
Expectations hypothesis theories
Theories of the term structure of interest rates which include the pure
Also referred to as the international market, the offshore market, or, more popularly, the
Fair market price
Amount at which an asset would change hands between two parties, both having
Fair market value
The price that an asset or service will fetch on the open market.
Fair Market Value
The highest price available, expressed in terms of cash, in an open and unrestricted market between informed, prudent parties acting at arm's length and under no compulsion to transact.
Farm Improvement and Marketing Cooperatives Loans Act
Federal funds market
The market where banks can borrow or lend reserves, allowing banks temporarily
Federal Open Market Committee (FOMC)
Fed committee that makes decisions about open-market operations.
An organized institutional structure or mechanism for creating and exchanging financial assets.
markets in which financial assets are traded.
The market for trading bonds and preferred stock.
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
Foreign bond market
That portion of the domestic bond market that represents issues floated by foreign
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
Foreign Exchange Market
A worldwide market in which one country's currency is bought or sold in exchange for another country's currency.
Part of a nation's internal market, representing the mechanisms for issuing and trading
Foreign market beta
A measure of foreign market risk that is derived from the capital asset pricing model.
Forward Exchange Market
A market in which foreign exchange can be bought or sold for delivery (and payment) at some specified future date but at a price agreed upon now.
A market in which participants agree to trade some commodity, security, or foreign
Direct trading in exchange-listed securities between investors without the use of a broker.
A market in which contracts for future delivery of a commodity or a security are bought or sold.
Purchases and sales of eurobonds that occur before the issue price is finally set.
Index and Option Market (IOM)
A division of the CME established in 1982 for trading stock index
Information Coefficient (IC)
The correlation between predicted and actual stock returns, sometimes used to
a number (prefaced as a multiplier
spread The spread between the interest rate offered in two sectors of the bond market for
Intermarket spread swaps
An exchange of one bond for another based on the manager's projection of a
The mechanisms for issuing and trading securities within a nation, including its domestic
Internally efficient market
Operationally efficient market.
Related: See external market.
International Monetary Market (IMM)
A division of the CME established in 1972 for trading financial
Intramarket sector spread
The spread between two issues of the same maturity within a market sector. For
A futures market in which the nearer months are selling at price premiums to the more
Liquidity preference hypothesis
The argument that greater liquidity is valuable, all else equal. Also, the
A market is locked if the bid = ask price. This can occur, for example, if the market is
Lower of cost or market
An accounting valuation rule that is used to reduce the
Make a market
A dealer is said to make a market when he quotes bid and offered prices at which he stands
The process whereby the book value or collateral value of a security is adjusted to reflect
mark to market
Refers to the accounting method that records increases
An arrangement whereby the profits or losses on a futures contract are settled each day.
market price of a share divided by book value per share.
The total dollar value of all outstanding shares. Computed as shares times current
Aggregate value of a corporation as determined by the market price of its total issued and outstanding stock.
market capitalization, or market cap
Current market value per share of
Market capitalization rate
Expected return on a security. The market-consensus estimate of the appropriate
Total demand for loans by borrowers equals total supply of loans from lenders. The market,
Market conversion price
Also called conversion parity price, the price that an investor effectively pays for
The period between the 2 latest highs or lows of the S&P 500, showing net performance of a
Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.