What is Capital Efficiency?

Capital market efficiency refers to the degree to which the capital market realizes the function of optimal allocation of financial resources.

Capital market efficiency

Right!

Capital market efficiency refers to the realization of financial

Capital market efficiency refers to the realization of financial

Specifically, the efficiency of the capital market includes two aspects: First,

Market efficiency in the efficient market theory does not refer to the operating efficiency of the market, but emphasizes the information efficiency of the market, that is, the timely, sufficient, and accurate reflection of market prices on information. According to the different information reflected in securities prices, Fama divides market efficiency into three levels: weak-type effective, semi-strong-type effective and strong-type effective.

(1) Weak Form Efficiency

Weak-form validity refers to the information that the price of securities reflects the price and trading volume in the history of securities.

(2) Semi-Strong Form Efficiency

Semi-strong effective means that the price of the securities fully reflects all public information (including historical information and transaction volume, but is not limited to this), such as annual and quarterly reports, distribution plans, profit forecasts, etc. of listed companies.

(3) Strong Form Efficiency

Strong market means that the price of securities reflects all public and private (inside) market information. When a market meets strong valid assumptions, it means that even if you have the so-called inside information, you still cannot get any extraordinary returns.