Financial Market

Can we predict stock prices? RWH argues that stock price movements are random i.e. the past information can’t be used to predict the future stock prices.

Economists George Akerlof (1970), Eugene Fama (1970), Michael Jensen and William Meckling (1976) have argued that information symmetry is key foundation to fair and efficient market. The modern financial market has adopted this notion of information symmetry.

Rapid financial innovations can be a problem unless the investors are well aware about the financial instruments. When the majority of public are financially illiterate, it can result in the unnecessary speculations prices of assets. This can create the volatile economy.