Stock market, Financial economics, Behavioral finance

Efficient market hypothesis presumes that market can function exceptionally well in allocating resources. It is a situation where no investor in the money markets can achieve excess profits based on risk-adjustment, if information on the investment is in public domain at the time when making the investment. Efficient market hypothesis stipulates that the prices of stocks in the money markets represent summation of all probabilities of all future consequences. The information available in the public domain is assumed to reflect stock prices in the money markets. The efficient market theory assumes that there are no transaction costs, money market is not segmented and it is easy to enter the money markets.