Efficient markets hypothesis - necessaryThe efficient market hypothesis EMH , alternatively known as the efficient market theory, is a hypothesis that states that share prices reflect all information and consistent alpha generation is impossible. According to the EMH, stocks always trade at their fair value on exchanges, making it impossible for investors to purchase undervalued stocks or sell stocks for inflated prices. Therefore, it should be impossible to outperform the overall market through expert stock selection or market timing , and the only way an investor can obtain higher returns is by purchasing riskier investments. Key Takeaways The efficient market hypothesis EMH or theory states that share prices reflect all information. The EMH hypothesizes that stocks trade at their fair market value on exchanges. efficient markets hypothesis.
Efficient markets hypothesis VideoWhat is The Efficient Market Hypothesis - EMH?
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