Question

In: Economics

What theory may imply that financial analysts can not make any extraordinary market gains?

What theory may imply that financial analysts can not make any extraordinary market gains?

Solutions

Expert Solution

The efficient market theory may imply that financial analysts can not make any extraordinary gains.

This theory means that the price of a stock correctly reflects all the available information to the public. If that is true, then all the prices of the stocks are correct as they reflect their true amount and their is no way to beat the market since there are no undervalued or overvalued stocks. Neither an expert financial analyst nor by executing correctly timed strategies can you outperform or beat the market


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