Problem
I. What is the main focus of the efficient market hypothesis (EMH)? Explain how the EMH relates to the predictability of prices in financial markets and the role of stock markets in raising capital for businesses.
II. Discuss the emerging question regarding asset markets and their potential impact on the greater economy. How have events such as the stock market crash in 1987 and the financial collapse in 2008 influenced the understanding of market instability and the occurrence of bubbles and crashes.
III. Explain the concept of bubbles in asset markets. How do participants perceive bubbles during their formation, and how does their perception change when the bubbles burst? Discuss the common charges associated with market crashes, such as greed, corruption, and foul play.