Question.2718 - Efficient market theory is important for companies that sell their debt and equity. It is also important for investors that buy and sell these securities. What is efficient market theory? Are American markets efficient? Please support your position for this discussion.
Answer Below:
According to the efficient market theory (EMT), asset prices always reflect their true worth since financial markets consider and reflect all available information (A Guide to Efficient Market Theory, 2020). It is generally believed that using any information that the market already knows would not allow one to outperform the market in an efficient market continuously. The efficient market hypothesis is an ongoing debate. The market in America may not always be perfectly efficient. While individual stock picks may occasionally succeed, the theory implies that investors are better off investing in assets like index funds and adopting a buy-and-hold strategy to capture overall market gains over time. References A Guide to Efficient Market Theory (2020) SmartAsset. Available at: https://smartasset.com/financial-advisor/efficient-market-theory.More Articles From Finance
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