Explain the Efficient Market Hypothesis

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Question - Please explain the Efficient Market Hypothesis (EMH) and illustrate its relation to the CAPM. In your answer, you should

i. Illustrate the Efficient Market Hypothesis (EMH) in its three forms and the implications of each for financial decision making and investment management.

ii. Briefly explain how the different ways in which the CAPM can be tested.

iii. Briefly discuss whether the evidence on market efficiency relates to evidence on whether the CAPM holds.

iv. Outline the main pieces of empirical evidence on whether financial markets are efficient or otherwise, drawing on the findings of empirical research discussed in the course, explaining its implications for whether the Efficient Market Hypothesis (EMH) holds or otherwise.

v. Explain the implications for investors of such evidence and how you would use it to formulate appropriate investment advice.

Reference no: EM132799122

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