imported>Doug Williamson |
imported>Doug Williamson |
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| (EMH).
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| The hypothesis that markets operate efficiently; that assets are fairly priced by the market mechanism to incorporate available information.
| | ''UK Law and pensions''. |
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| | A legal concept whereby property is held by one or more persons for the benefit of others for the purposes specified in the trust deed. |
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| There are three forms of potential efficiency: the weak form, the semi-strong form and the strong form.
| | In a pensions context, the beneficiaries of the trust are the members of the pension scheme. |
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| #The <u>weak form</u> states that past prices are no guide to future prices, so charting techniques cannot be used to make excess returns.
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| #The <u>semi-strong form</u> states that prices react to public information so that any form of analysis using publicly available information cannot be successful in consistently generating excess returns.
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| #The <u>strong form</u> states that even insider information cannot generate consistent excess returns.
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| Important implications of the efficient market hypothesis for financial managers include:
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| * Keeping the financial markets well-informed.
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| * Taking market price movements seriously.
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| * Not attempting to 'fine tune' the timing of security issues.
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| Also known as the Efficient markets hypothesis.
| | A large organisation that has control - or attempts to gain control - of a market by the use of monopoly or other anti-competitive trade practices. |
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| In practice, extreme market outturns occur more commonly than predicted by simple efficient markets theory.
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| As a consequence, the simplistic application of efficient markets theory to risk analysis will systematically:
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| * Overstate market stability, and
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| * Understate related market risks.
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| == See also == | | == See also == |
| * [[Asymmetry of information]] | | * [[Antitrust law]] |
| * [[Efficiency]] | | * [[Beneficiary]] |
| * [[Efficient market]] | | * [[Deed]] |
| * [[Interest rate parity]] | | * [[Monopoly]] |
| * [[No free lunch]] | | * [[Settlement]] |
| * [[Perfect competition]] | | * [[Settlor]] |
| * [[Semi-strong market efficiency]] | | * [[Trust deed]] |
| * [[Strong form efficiency]]
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| * [[Weak form efficiency]]
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| * [[Fractal markets hypothesis]]
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1.
UK Law and pensions.
A legal concept whereby property is held by one or more persons for the benefit of others for the purposes specified in the trust deed.
In a pensions context, the beneficiaries of the trust are the members of the pension scheme.
2.
US.
A large organisation that has control - or attempts to gain control - of a market by the use of monopoly or other anti-competitive trade practices.
See also
