Question

10. The stock markets in the U.S. are more efficient than in many other countries. Does that mean that all information is available to all investors? 11. List the factors that make emerging market investments more risky for Americans.

Answer 1

If the market is able to provide information to traders maximum opportunity to do transactions without increasing cost, it may be called as efficient. In other words lower the transaction cost, which included cost of obtaining information, the more efficient is market.

United States is definitely a matured market with easy access of information due to its updated technology and wider disclosure policies do have an edge over other markets in many other countries and may be termed more efficient.

If we look at developing market it is still difficult for traders to predict future prices due to not readily available past price movements and closed economy, where developed economies like United states has upper hand.

The emerging market investing is definitely a risky venture due to its volatility in prices and overall Geo political issues. However the return they offer still cannot be ignored as the economy is growing and have huge potential to cash. So exposure to emerging markets through blue chip companies may be a safer option for Americans for investments because of global nature of product these blue chip companies provide.