|Efficient Markets Hypothesis|
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Definition of Efficient Markets Hypothesis
Efficient Markets Hypothesis
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.
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
A measurement of the extent to which the returns on a given stock move with stock market.
markets for long-term financing.
Also called spot markets, these are markets that involve the immediate delivery of a security
a measure of dispersion that indicates the degree of relative association existing between two variables
A measure of the goodness of fit of the relationship between the dependent and
a measure of dispersion that
a measure of risk used when the standard deviations for multiple projects are approximately
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
markets for derivative instruments.
A market in which new information is very quickly reflected accurately in share
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
Efficient Market Hypothesis
In general the hypothesis states that all relevant information is fully and
A portfolio that provides the greatest expected return for a given level of risk (i.e. standard
The financial markets of developing economies.
Expectations hypothesis theories
Theories of the term structure of interest rates which include the pure
markets in which financial assets are traded.
Information Coefficient (IC)
The correlation between predicted and actual stock returns, sometimes used to
a number (prefaced as a multiplier
Internally efficient market
Operationally efficient market.
Liquidity preference hypothesis
The argument that greater liquidity is valuable, all else equal. Also, the
Markowitz efficient frontier
The graphical depiction of the Markowitz efficient set of portfolios
Markowitz efficient portfolio
Also called a mean-variance efficient portfolio, a portfolio that has the highest
Markowitz efficient set of portfolios
The collection of all efficient portfolios, graphically referred to as the
Mean-variance efficient portfolio
Related: Markowitz efficient portfolio
markets in which each transaction is separately negotiated between buyer and seller (i.e.
Operationally efficient market
Also called an internally efficient market, one in which investors can obtain
The supposition that investors overreact to unanticipated news, resulting in
Perfectly competitive financial markets
markets in which no trader has the power to change the price of
Permanent Income Hypothesis
Theory that individuals base current consumption spending on their perceived long-run average income rather than their current income.
Related: cash markets
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