Question

Which of the investments discussed has had the highest average return and risk premium? I Which of the investments discussed has had the highest standard deviation? I What is capital market efficiency? I What are the three forms of market efficiency?

Answer 1

Answer:

Capital Market Efficieny alludes to how much market costs indicates all accessible, applicable data. When the markets are effective, at that point all data is as of now included into the costs, thus it is extremely unlikely to "beat" the market in light of the fact that there are no underpriced or overpriced securities available.

There are three forms of market efficiency:

1. Weak Form- The weak type of market efficiency is that movements of the past/ previous prices are not helpful at estimating future prices. On the off chance that all accessible, significant data is consolidated into current prices, at that point any data pertinent data that can be gathered from past costs is now fused into current costs. In this manner future value changes must be the consequence of new data opening up.

2. Semi-strong Form- The semi-strong type of market efficieny expects that stocks alter rapidly to assimilate new open data so a financial specialist can't profit far beyond the market by exchanging on that new data. This suggests that no analysis would be reliable systems to accomplish prevalent returns, because any data received through fundamental analysis will as of now be accessible and accordingly effectively included into current costs.

3. Strong Form- The strong type of market efficiency says that market costs reflects all data both public and private, expanding on and consolidating the weak and semi-strong form. When the analysts or investors are made available to the privileged information,  it would adjust price immediately without offering them to benefit from that information.