LECTURE12CORPORATE FINANCING AND THE LESSONS OF MARKET EFFICIENCY培训教材.ppt

The McGraw-Hill Companies, Inc.,2001 12- * Irwin/McGraw-Hill Irwin/McGraw-Hill Chapter 12 Fundamentals of Corporate Finance Third Edition Corporate Financing and the Lessons of Market Efficiency Brealey Myers Marcus slides by Matthew Will Irwin/McGraw-Hill The McGraw-Hill Companies, Inc.,2001 Market Efficiency Theory Capital markets reflect all relevant information. You cannot consistently earn excess profits. Market Efficiency Market Efficiency Efficient Capital Markets - Financial markets in which security prices rapidly reflect all relevant information about asset values. Random Walk - Security prices change randomly, with no predictable trends or patterns. Random Walk Theory The movement of stock prices from day to day DO NOT reflect any pattern. Statistically speaking, the movement of stock prices is random (skewed positive over the long term). Random Walk Theory $103.00 $100.00 $106.09 $100.43 $97.50 $100.43 $95.06 Coin Toss Game Heads Heads Heads Tails Tails Tails Random Walk Theory Random Walk Theory Market Efficiency Technical Analysts - Investors who attempt to identify over- or undervalued stocks by searching for patterns in past prices. Fundamental Analysts - Analysts who attempt to fund under- or overvalued securities by analyzing fundamental information, such as earnings, asset values, and business prospects. Efficient Market Theory Last Month This Month Next Month $90 70 50 EI’s Stock Price Cycles disappear once identified Market Efficiency Weak Form Efficiency - Market prices rapidly reflect all information contained in the history of past prices. Semi-Strong Form Efficiency - Market prices reflect all publicly available information. Strong Form Efficiency - Market prices reflect all information that could in principle be used to determine true value. Efficient Market Theory Announcement Date Market Efficiency Lessons of Market Efficiency Markets have no memory Trust market prices There are no financial illusions Do it yourself diver