In a 1-2-page assessment, explain the Efficient Market Hypothesis and its implications on financial decisions.
Your assessment will focus on an interesting theoretical concept called the Efficient Markets Hypothesis (EMH). This concept tries to provide adequate answers to such questions as, "Are stocks in equilibrium?" and "Is it possible for an investor to consistently 'beat the market' without any inside information?"
Required Resources
The following resources are required to complete the assessment.
Library Resources
The following e-books or articles from the Capella University Library are linked directly in this course:
o Malkiel, B. G. (1989). Is the stock market efficient?Science, 243(4896), 1313-1318.
- Malkiel is a seminal, foundational author in the field. Everything you read about the Efficient Market Hypothesis will refer back to this fundamental explanation of the EMH theory. As you read this article, pay particular attention to the three levels of market efficiency to help you prepare for your assessment.
Assessment Instructions
Read the 1989 Malkiel article, "Is the Stock Market Efficient," linked in the Resources. In addition, conduct research in the Capella library or the Internet on different perspectives on the Efficient Market Hypothesis. You might try using search terms such as "efficient market hypothesis controversy" and "efficient market hypothesis perspectives" to obtain relevant results.
Use your research to complete the following:
o Explain the Efficient Markets Hypothesis (EMH).
o Distinguish among the three levels of market efficiency.
o Briefly explain the implications of the EMH on financial decisions by individual investors.
Use at least two research resources to support your ideas.
Additional Requirements
o Length: Your paper should be 1-2 typed, double-spaced pages. In addition, include a title page and references page.
o Written communication: Written communication should be free of errors that detract from the overall message.
o Style and Formatting: Your essay should be formatted according to APA style and formatting to cite your references.
o Resources: You must use at least two references in your essay.
o Font and font size: Times New Roman, 12 point.