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


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
©2004-2015 Investor Glossary - All rights reserved - Terms of Use