Question

What do you think Keynes would think of the efficient markets hypothesis? Explain

What do you think Keynes would think of the efficient markets hypothesis? Explain

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Answer #1

Answer:-

KEYNES THEORY ON EFFICIENT MARKET HYPOTHESIS'

It says that Market are correctly valued and assets prices reflects all available information about them. If new information about a company is available the price will quickly reflect this and there is no scope of arbitrage.

Means alpha generation is impossible ( markets are neutral)

Speculators have very less or no scope of harming small investors or create a bubble.

However, this theory is criticised by many economist and research scholars

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