The valuation models we have been looking at rely in part on the idea that markets are efficient, i.e., that markets respond instantaneously to information, and thus prices that ex
ist are fair. The Efficient Market Hypothesis, which was developed by Eugene Fama of the University of Chicago in the 1960s, is the formal realization of this idea. This simple but powerful idea has been a solid backbone for the study of corporate finance and securities valuation for several decades. However, several noted economists, including Robert Schiller, have stated that the Efficient Market Hypothesis is dead. There are many articles about this - look at what Paul Krugman and others are writing. Do you agree? And if EMH is no longer valid, are the valuation models no longer an appropriate point of study? Please provide links to all of your sources - you many want to utilize the virtual student lounge as a place to test some of your ideas.
The valuation models we have been looking at rely in part on the idea that markets are efficient, i.e., that markets respond instantaneously to information, and thus prices that ex
ist are fair. The Efficient Market Hypothesis, which was developed by Eugene Fama of the University of Chicago in the 1960s, is the formal realization of this idea. This simple but powerful idea has been a solid backbone for the study of corporate finance and securities valuation for several decades. However, several noted economists, including Robert Schiller, have stated that the Efficient Market Hypothesis is dead. There are many articles about this - look at what Paul Krugman and others are writing. Do you agree? And if EMH is no longer valid, are the valuation models no longer an appropriate point of study? Please provide links to all of your sources - you many want to utilize the virtual student lounge as a place to test some of your ideas.
