Investor Glossary-inefficient marketInvestor Glossary-inefficient marketInvestor Glossary-inefficient marketInvestor Glossary-inefficient marketInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Inefficient Market

The HTML to link to this page
 

An inefficient market is one in which assets are underpriced or overpriced by market participants. According to the efficient market hypothesis (EMH), the difference between an inefficient market and an efficient one comes down to whether participants are rational investors having good information readily available. The less quality information and the slower it is spread, the more of an inefficient market exists. Abrupt drops during panics are evidence that the equity market is an inefficient market. That investors violate the rationality assumption underpinning the efficiency logic at these key times suggests an inefficient market. Contemporary behavioral finance asserts that the inefficient market is a product of these market psychology phenomena, but the inefficient market is still defined by comparison to the hypothetical efficient one.



Rate this inefficient market definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: in escrow, FTSE, EBITDA, FICO score, 401a, reverse mortgage, liquidity ratio, average price per share, phantom income, cancelled check, 144a, retained earnings, inflation, class C shares, LIBOR, diluted share, Key Rate Duration, APR, command economy, minority interest, option premium, balance sheet, ex-dividend, VIX, stock split, risk management, debt service coverage, implied volatility, real GDP, deferred revenue, 1035 exchange, required rate of return, quality assurance, covered put, stock market close, ex-dividend date, labor relations, annual return, Zero Cost Collar, current ratio, dividends payable, 1031 exchange, limit order, open position, per diem, margin rate, irrevocable trust, deferred tax, wholly-owned subsidiary


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use