Question

‘Market efficiency condition should be present in order to conduct capital market research'. (120 words )

Answer 1

When researching the capital market, the efficiency of the market reflects the information related to the price of everything. If there is efficiency in the market, then all the information is included in the prices from the beginning.

When we invest in the stock market, our general goal is to get a return on investment capital. But many investors not only try to get a profitable return, but also try to push the market backwards or forwards.

In a functional market, prices are not approximate but random, so any pattern of investment is difficult to understand. A planned approach to investing is unlikely to succeed.

The degree of market efficiency is a weak form of market efficiency, meaning that previous price movements are not useful for predicting prices in the future. If all things were available, then the relevant information would have been included in the current prices, then all the information extracted from the previous prices would have already been included in the existing prices. This will result in future price changes only as new information becomes available.

An efficient market is one in which the fair value of the investment is the value of the investment.

Market efficiency is not only specific to that market, the market is efficient for all investors but in general the specific market is efficient in the case of the investor.