Fama-French and the Efficient Market Hypothesis
The Efficient Market Hypothesis basically says that the price of an asset reflects an accurate potential for future growth and risk. Fama and French found that risk explains only 70% of a stock's return and that another 25% can be explained by size and value. If the market systematically devalues small cap and value stocks, isn't that a market failure that disproves the efficient market hypothesis?
Posted Apr 15, 2013, 10:01 PM UTC
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