stock market return history

Financial Management?

Suppose the stock market is semi-strong efficient. Which of the following statements is correct? A. Stocks and bonds must have the same expected return. b.You can hope to overcome the global market by looking at the history of past price action of an individual. c.For investor medium, the expected net present value of investment in the stock market is zero.

The answer is c, but I will go one step further and tell you why. Semi-strong means that the market is not an efficient market, while each piece of information – public and non public – and immediately entered correctly in the price investment. is (a) at least is right for stocks and bonds do not have the same expected return no risk of different values. the rate of diffusion of information is irrelevant at this point. It is simply wrong. (B) is about right as the historical price information is publicly available and already known by almost every participant the market. This should already be known in the market already and has nothing to do with dissemination of information. (C) is the most correct, because a strong market theorem states semi that most information on the public market and is counting on the value of assets. Therefore, for the average investor – the net present value of stocks after adjusting for risk is zero. This is under the assumption that the discount rate should be corrected to factoring in most public information. However, there can be cases where substantial private information is not taken into account or public information materials improperly factored in. However, this is for cases does not include "The average investor."

Step 9: History – from the IFA Podcast Series

[affmage source="clickbank" results="20"]stock market return history[/affmage]