Question

1. Does EMH imply stock returns are unpredictable and why?

Answer 1

Efficient Market hypothesis implies that stock market Index Return can never be beaten by an individual investors through investing in stocks.

This theory advocates that all the privately and publicly held informations are already discounted in the price and there is no chance for any investor to beat the market rate of return .

According to Efficient market hypothesis, Stock market returns are highly in line with that of index and Lower than it so it can be predicted for a certain extent as it can never beat the market rate.

It is wrong to say that stock prices are highly predictable according to EMH as Stock prices already discount all private and public information so there is less scope of uncertainty.