IDEAS home Printed from https://ideas.repec.org/h/wsi/wschap/9789813234109_0010.html
   My bibliography  Save this book chapter

Market Efficiency

In: Lecture Notes in Market Microstructure and Trading

Author

Listed:
  • Peter Joakim Westerholm

Abstract

Introduction to Market EfficiencyAn Efficient Capital Market is a market where security prices reflect all available information.In an efficient market, the expected price of a tradable asset, given the information φ available to the market and the information φk available to any investor k, equals the expected price based on the information available to the market for all investors k:The price of the asset reflects the consensus evaluation of the market based on the information available to the market, regardless of private information held by investor k.Individual k's information set φk does not improve his estimate of expected price in an efficient market; the market price already reflects all relevant information φ including investor k's special information φk.In a perfectly efficient market where security prices fully reflect all available information, all security transactions will have zero net present value.

Suggested Citation

  • Peter Joakim Westerholm, 2019. "Market Efficiency," World Scientific Book Chapters, in: Lecture Notes in Market Microstructure and Trading, chapter 10, pages 149-170, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789813234109_0010
    as

    Download full text from publisher

    File URL: https://www.worldscientific.com/doi/pdf/10.1142/9789813234109_0010
    Download Restriction: Ebook Access is available upon purchase.
    File URL: https://www.worldscientific.com/doi/abs/10.1142/9789813234109_0010
    Download Restriction: Ebook Access is available upon purchase.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Trading; Securities Markets; Priced Discovery; Liquidity; Microstructure; Investments;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:wschap:9789813234109_0010. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscientific.com/page/worldscibooks .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.