On Friday, May 13, 2011, Mrs. Tajana Barbić, Ph.D., research assistant from The Institute of Economics, Zagreb, presented a guest lecture as part of Corporate Finance course. Tajana Barbić is an Alumna of IGBS Zagreb who graduated from MBA Program in 2006.
She spoke about Efficient Market Hypothesis that suggests that market prices fully reflect all available information. Consequently, market practitioners are incapable of making above-average returns by employing technical or fundamental analysis nor privileged information.
The more efficient is the market, the more random is the sequence of price changes generated by such a market, and the most efficient market of all is one in which price changes are completely random and unpredictable.
Given all of the theoretical and empirical evidence for and against the EMH..... there is still no consensus among economists. Therefore the efficient market should be seen as a self correcting mechanism, where inefficiencies appear at regular intervals but disappear almost instantaneously as investors find and trade on them (Malkiel, 2003).
