Discussion 1&2 - The book discusses the Efficient Market
The book discusses the Efficient Market Hypothesis (EMH) and its three forms. The EMH has a lot to do with information and stock prices.
· How does information get into prices?
· How do we know if prices reflect all available information?
· What are abnormal returns?
· What does the EMH have to say about abnormal returns?
We all remember the story about Martha Stewart, who was accused of insider trading. If not, take a moment to research this incident, then answer the following:
· Why is it illegal to trade stocks based on inside information?
· Other than Martha Stewart, provide an example of someone who was trading stocks on inside information.