Search the World's Largest Database of Information Science & Technology Terms & Definitions
InfInfoScipedia LogoScipedia
A Free Service of IGI Global Publishing House
Below please find a list of definitions for the term that
you selected from multiple scholarly research resources.

What is Efficient Market Hypothesis

Handbook of Research on Behavioral Finance and Investment Strategies: Decision Making in the Financial Industry
A concept given by Fama (1970) that describes an efficient financial market as one in which security prices completely reflect the available information. Further, the investors in this scenario are well informed and make rational choices, such that the mispricing of securities cannot occur.
Published in Chapter:
Theory of Behavioral Finance
Jaya M. Prosad (Jaypee Business School, India), Sujata Kapoor (Jaypee Business School, India), and Jhumur Sengupta (Management Development Institute, India)
DOI: 10.4018/978-1-4666-7484-4.ch001
This chapter explores the evolution of modern behavioral finance theories from the traditional framework. It focuses on three main issues. First, it analyzes the importance of standard finance theories and the situations where they become insufficient i.e. market anomalies. Second, it signifies the role of behavioral finance in narrowing down the gaps between traditional finance theories and actual market conditions. This involves the substitution of standard finance theories with more realistic behavioral theories like the prospect theory (Kahneman & Tversky, 1979). In the end, it provides a synthesis of academic events that substantiate the presence of behavioral biases, their underlying psychology and their impact on financial markets. This chapter also highlights the implications of behavior biases on financial practitioners like market experts, portfolio managers and individual investors. The chapter concludes with providing the limitations and future scope of research in behavioral finance.
Full Text Chapter Download: US $37.50 Add to Cart
More Results
Event Study Assumptions
The primary and long-standing assumption that the markets are efficient and instantly incorporate all new news into the stock prices.
Full Text Chapter Download: US $37.50 Add to Cart
Efficient Market Hypothesis for Islamic Capital Markets
A hypothesis which claims that the price of a financial asset includes all information.
Full Text Chapter Download: US $37.50 Add to Cart
Intellectual Capital Measurement
Assumption stating that existing share prices always incorporate and reflect all relevant information and thus are traded at a fair value.
Full Text Chapter Download: US $37.50 Add to Cart
eContent Pro Discount Banner
InfoSci OnDemandECP Editorial ServicesAGOSR