Efficient Markets Hypothesis: Overview and Implications

This lecture introduces the Efficient Markets Hypothesis (EMH) and its different forms, from weak to strong. It explains how market efficiency is related to competition and the paradox of informationally efficient markets. The instructor discusses the testability of market efficiency, implications of EMH on security prices, and provides evidence on market manipulation and illegal insider trading cases. The lecture covers event studies, return predictability, cross-sectional anomalies, and empirical evidence on active mutual fund performance.