Efficient Market Hypothesis
Introduction:
From the last several decades the efficiency of stock market has been the sole purpose of research studies. As a result, several theories have been introduced and implemented in relation to principally how the competition in the stock market will force the known information into the prices of securities. The knowledge of information on a variety of securities that are traded in the market is one of the major factors in influencing the movements of stock market. In the stock market, a securities price tends to move rise and fall depending mainly on the availability of the information. The stock prices in the efficient market correspond to available information and therefore register any rise or fall mainly when recent and unpredictable information is available. The up and down in the security prices largely depends upon the advantages and disadvantages associated with the available information and to what extent it will affect the company 's performance which is represented by the security. As it is very difficult to tell whether the information available is useful or not, in the same way it is quite impossible to make predictions about the trend of the stock market, such that whether there will be an upward or downward trend in the near future by using the available information. In the financial market it is not mandatory that all professionals related to market always possess the information about the securities and have skills to evaluate this information for their gain. The only thing the efficient market requires is that few individuals must have the information about securities and as a result of the information supplied by them, the whole market must be well informed and benefitted. Hence the available information plays an important role in determining the efficiency of the stock market.
By focussing on the above idea, the concept of Efficient Market Hypothesis has been developed and became one of the most concentrated and debatable topic
From the last several decades the efficiency of stock market has been the sole purpose of research studies. As a result, several theories have been introduced and implemented in relation to principally how the competition in the stock market will force the known information into the prices of securities. The knowledge of information on a variety of securities that are traded in the market is one of the major factors in influencing the movements of stock market. In the stock market, a securities price tends to move rise and fall depending mainly on the availability of the information. The stock prices in the efficient market correspond to available information and therefore register any rise or fall mainly when recent and unpredictable information is available. The up and down in the security prices largely depends upon the advantages and disadvantages associated with the available information and to what extent it will affect the company 's performance which is represented by the security. As it is very difficult to tell whether the information available is useful or not, in the same way it is quite impossible to make predictions about the trend of the stock market, such that whether there will be an upward or downward trend in the near future by using the available information. In the financial market it is not mandatory that all professionals related to market always possess the information about the securities and have skills to evaluate this information for their gain. The only thing the efficient market requires is that few individuals must have the information about securities and as a result of the information supplied by them, the whole market must be well informed and benefitted. Hence the available information plays an important role in determining the efficiency of the stock market.
By focussing on the above idea, the concept of Efficient Market Hypothesis has been developed and became one of the most concentrated and debatable topic
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