Explain the concept of an efficient capital market

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Question -

a) Explain the concept of an Efficient Capital Market, and discuss the implications for investors seeking short-term gains on capital markets. Distinguish between 'weak-form efficiency, 'semi-strong-form efficiency' and strong-form efficiency and suggest how each might be identified.

b) A number of anomalies in market pricing of shares have been identified. They imply that markets may not be efficient. Identify the more important anomalies, also explain and discuss their implications.

c) Behavioural Finance offers further explanations for why market values depart from fundamental value. Using both attitudes towards risk and beliefs regarding future probabilities as examples, outline this approach.

Reference no: EM132200338

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