Explain in 525 words what it means to have efficient capital market
Explain in 525 words what it means to have efficient capital market, including:
Describe the behavioral challenges in achieving efficiency.
Discuss the three forms of market efficiency.
What are the implications to corporate finance?
Would you consider the real estate market an efficient capital market? Please explain why or why not.
Capital Market Efficiency
An efficient capital market is a place where information related to the worth of securities are encompassed into its costs in the actual time and precisely. Because the worth of the security changes with regard to the current worth of the upcoming cash flow, an effective capital market allows these changes to be mirrored insecurities’ present price. It is likewise a market where the unprejudiced approximation of the accurate worth of its asset. The art of possessing capital market alludes to a state whereby share value mirrors the current info in the right existing period correctly. Because the securities worth changes irregularly depending on the instantaneous worth of the cash flow in the coming periods, an effective capital market enables such tremulousness to be reflected in the contemporary value of the securities.