Education For All

www.edforall.net

Text size
  • Increase font size
  • Default font size
  • Decrease font size

Lectures (Video)

Course Home

Financial Markets - Lecture 6

Get the Flash Player to view video.
Lecture 6 - Efficient Markets vs. Excess Volatility

Several theories in finance relate to stock price analysis and prediction. The efficient markets hypothesis states that stock prices for publicly-traded companies reflect all available information. Prices adjust to new information instantaneously, so it is impossible to "beat the market." Furthermore, the random walk theory asserts that changes in stock prices arise only from unanticipated new information, and so it is impossible to predict the direction of stock prices. Using statistical tools, we can attempt to test the hypotheses and to predict future stock prices. These tests show that efficient markets theory is a half-truth: it is difficult but not impossible for some people to beat the market.

Prof. Robert Shiller
ECON 252 Financial Markets, Spring 2008
(Yale University: Open Yale)
http://oyc.yale.edu
Date accessed: 2009-01-06
License: Creative Commons BY-NC-SA

Lecture Material

Not Available.


 

Translate

Chinese (Simplified) French German Italian Japanese Korean Portuguese Russian Spanish
More educational resources: