answersLogoWhite

0

:it means market efficiency can only be jointly tested what a given model of equilibrium expected returns.

-This means that we can't ever be sure what the correct model of expected returns is.

-In other words, we can only decide if markets are efficient if we assume that we know what risks investors care about, and how they are priced.

-There are lots of models of expected returns, and we don't know which one is correct. Ex. CAPM, fAMA French, Liquidity, Macro risk, Beta.

-We can only say that he market is or isn't efficient with respect to that model, but we can't say overall whether the market efficiency is independently true

User Avatar

Wiki User

13y ago

What else can I help you with?