01:220:103 Lecture Notes - Lecture 10: Underemployment, Medicaid, Business Cycle
7 Apr 2016
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Document Summary
Ef cient markets hypothesis: informational ef ciency: how quickly info is incorporated by markets into asset prices. Semi strong-form: prices re ect all public info: rules out fundamental (assess fundamentals of company 2 determine whether or not 2 buy & sell; assessing debt:equity ratios, etc) & technical analysis. Strong-form: prices re ect all public & private info: can"t make pro t even from insider trading advantages, however, it"s a dif cult hypothesis to test, fundamental ef ciency: what is ability to pro t from access 2 certain info. Prices of assets re ect their fundamental value: area of big con ict in econ & nancial market analysis. Diversi cation: lowers risk of portfolio: least risky assets for you are assets that are negatively correlated w/ your portfolio. Invest in ious, commodities (gold), real estate. While some stocks may go down, others may also retain their value or increase in value. Best trading strategy = buy & hold.
