5. Market efficiency (S12.2) How would you respond to the following comments? a. Efficient market, my eye!

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5. Market efficiency (S12.2) How would you respond to the following comments?

a. “Efficient market, my eye! I know lots of investors who do crazy things.”

b. “Efficient market? Balderdash! I know at least a dozen people who have made a bundle in the stock market.”

c. “The trouble with the efficient-market theory is that it ignores investors’ psychology.”

d. “Despite all the limitations, the best guide to a company’s value is its written-down book value. It is much more stable than market value, which depends on temporary fashions.”

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Principles Of Corporate Finance

ISBN: 9781264080946

14th Edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans

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