Question
Your friend boasts that they beat the market every month for the past 2 years. Does this mean that EMH is false? A. No, since
Your friend boasts that they beat the market every month for the past 2 years. Does this mean that EMH is false?
| A. | No, since EMH does not mean that you cannot earn high returns. EMH simply means that higher returns can only happen when you take on higher risk. And Risk simply means uncertainty. So, my friend is just lucky that the higher uncertainty has not worked against them yet. | |
| B. | No, since EMH does make any predictions about your friend's return. EMH says that his streak will end next year. | |
| C. | Yes, EMH has been fully debunked. They even awarded a Nobel Prize to Shiller who debunked EMH | |
| D. | Yes, EMH is no longer accepted since there are too many anomalies. The existence of anomalies means that markets are not efficient since if they were there would be no anomalies. |
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Fundamentals of corporate finance
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
2nd Edition
978-0470933268, 470933267, 470876441, 978-0470876442
