Describe the behavior of securities prices in an efficient market. According to believers in the efficient markets hypothesis, what keeps securities prices efficient?
Answer to relevant QuestionsWhat does it mean to say market efficiency has three "levels?" Identify at least 3 financial market anomalies that are inconsistent with the efficient markets hypothesis. Define the terms alpha and beta in the context of an investment portfolio. According to finance theory, what is the expected difference in stock returns and volatility for high- and low-beta stocks and stock portfolios? Explain the major limitations of the Dividend Discount Model.
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