what are the empirical evidence that supports or refutes the Efficient Market Hypothesis? need details thanks

what are the empirical evidence that supports or refutes the Efficient Market Hypothesis?

need details thanks

Expert Solution

Answer: The efficient market Hypothesis takes in to account that the price of a security available in the market reflects all relevant information and it is impossible to beat the market on a sustainable basis.

Best evidence to refute this hypothesis is the evidence of market bubbles and crashes. If the assumptions of the hypothesis were correct, Housing bubble and stock market crash of the 2008 wouldn't have happened.

The same can be said for the tech bubble that happened in the 1990s, when many tech companies were trading at very high valuations before crashing.It means all the information was not utilized efficiently by the market or were not available for general public at large

Behavioral aspects where people biases also comes in to effect in taking decisions have also been not taken in to consideration in this hypothesis.

In support of this Hypothesis, It has been observed in the market in many researches that only few people and only for short period of time have been able to outperform the market. Its like it is almost impossible to beat the market on a regular basis as said by the Efficient market hypothesis.

jeff jeffy answered 1 year ago

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what are the empirical evidence that supports or refutes the Efficient Market Hypothesis? need details thanks

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