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Posts Tagged ‘efficient markets hypothesis’

The efficient markets hypothesis (EMH) states, more or less, that an efficient market incorporates all known information into the price of any asset available for purchase in that market. The University of Chicago School has provided some of this theory’s strongest proponents.

So as the story goes, one day two U of C economists, one a senior professor and EMH advocate, and the other a graduate student in economics, are walking through the Quadrangle when they see a $100 bill lying on the pavement in front of them. The graduate student bends over to pick it up, but the professor stops him.

“Don’t bother,” the professor says. “If that were a real $100 bill, someone would have picked it up already.”

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