Efficient Market Hypothesis (EMH)

This refers to the hypothesis that, over time, given the information available at the time, returns of stocks and bonds cannot exceed the average market returns.

The hypothesis claims that current market prices already reflect all publicly available information; stronger versions of the hypothesis claim that prices adjust immediately to new information.

Efficient Market Hypothesis EMH Diagram

Efficient market hypothesis is a term normally found in financial management. Explore our learning zone to discover more