Problem:
Real world financial markets such as the NYSE or the foreign exchange (foreign currency) markets are assumed to be "efficient" in their structure and operation. Indeed if they are not (or not approximately efficient) much of contemporary financial theory would not apply to them. What is an efficient market, why are they important and what are the various forms of market efficiency? Please provide examples of each.
Please support answer with a minimum of three quality academic and/or industry references. Ex: Examples of acceptable references include:
The Financial Times
The Economist
The Wall Street Journal
Businessweek
Reuters
Marketwatch
BBC
CNBC
The Journal of Finance
Harvard Business Review
Examples of unacceptable references include:
- Wikipedia
- About.com
- Ask.com
- Yahoo Answers
- eHow
- Personal blogs.