Market efficiency can be impeded by reduction in number of market
participants which also leads to market imperfections.
participants which also leads to market imperfections.
Equity Investments MCQ - Equity Investments Section 1
Restrictions on short selling in some markets impede efficiency. Reducing
the restrictions on short selling will allow for more arbitrage trading.
Arbitrage results in higher efficiency as price differences quickly disappear.
If the number of financial market participants increase, markets become
more efficient.
In the weak form efficient market hypothesis, security prices fully reflect
all price and trading volume information.
Securities markets are not strong-form market efficient as regulations try
to prevent insider trading.
