Are Financial Markets Efficient or Inefficient?
Shleifer (2000) states â€œan average investorâ€”whether an individual, a pension fund, or a mutual fundâ€”cannot hope to consistently beat the market, and the vast resources that such investors dedicate to analyzing, picking, and trading securities are wastedâ€ (p. 1). If this is the case, do you think the financial market knows best? Are the market prices fair? Why? What forces prevent them from becoming unfair (i.e., overpriced or underpriced?)
As a financial manager, you will need to consider the many variables that play into the financial decision-making process. What specific factors do you need to consider as you think about the efficiency of financial markets?
For this Discussion, you will examine the efficiency of financial markets.
For this Discussion:
Post an explanation of whether you believe financial markets are efficient and why. If you believe markets are not fully efficient, do you think inefficiencies can be exploited? Why? Provide examples and/or use your Learning Materials to support your post.