FIN 501 Lecture 8: FIN 501 - Lecture #8 (Chap. #8,9)
20 Nov 2017
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Document Summary
We begin by asking a basic question: can you, as an investor, consistently beat the market? . It may surprise you to learn that evidence strongly suggests that the answer to this question is. We show that even professional money managers have trouble beating the market. At the end of the chapter, we describe some market phenomena that sound more like carnival side shows, such as the amazing january effect. The efficient market hypothesis (emh) is a theory that asserts: as a practical matter, the major financial markets reflect all relevant information at a given time. The excess return on an investment is the return in excess of that earned by other investments that have the same risk. Beating the market means consistently earning a positive excess return. These conditions are so powerful that any one of them leads to efficiency.
