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Business LibreTexts

7: Rational Expectations, Efficient Markets, and the Valuation of Corporate Equities

  • Page ID
    706
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    CHAPTER OBJECTIVES

    By the end of this chapter, students should be able to:

    • Explain when expectations are rational and when they are irrational.
    • Explain how corporate equities (stocks, shares of a corporation) are valued.
    • Explain what is meant by the term market efficiency.
    • Describe the ways in which financial markets are efficient.
    • Describe the ways in which financial markets are inefficient.