Efficient Market Hypothesis When setting financial prices, the market is usually considered expert and intelligent. In a stock market, stocks are based on the information provided and should be valued at an accurate level. In the past this would have had to be ensured by the availability of sufficient information from investors. However, as new information is provided, prices will change. “Free markets, the hypothesis goes, could only be inefficient if investors ignored price-sensitive data. Anyone using this data could make large profits and the market would readjust and become efficient again” (McMinn, 2007, ¶ 1). This paper will identify the different forms of EMH, the sources that support and refute the EMH, and finally evaluate whether the EMH applies to mergers. Three Forms of the Efficient Market Hypothesis Eugene Fama coined the term efficient market hypothesis (EMH) in the 1960s. There are three forms of the efficient market hypothesis: the weak, semi-strong, and strong forms. The weak form of the EMH states that past price and volume are indicated by current asset prices. The current market price of the security is revealed by information controlled from previous price series. “It is called the weak form because stock prices are the most publicly and easily accessible information. It implies that no one should be able to outperform the market by using something that “everyone else knows” (Han, 2008, ¶6). The form semi-strong of the EMH states that all information made accessible to the public is included in asset prices. Public information is not limited to financial statements, economic factors and other data ... half of the document. ...C8S12001/SK.PDFKolahi, F. (2006 Month-end effect for the European stock market. Retrieved March 12, 2008, from http://ir. lib.sfu.ca/retrieve/3705/etd2349.pdfMcMinn, D . (2007 INEFFICIENT VS EFFICIENT MARKET HYPOTHESIS Retrieved March 11, 2008, from David McMinn: http://www.davidmcminn.com/pages/inefficient. htmMontego, P. (n.d.). Retrieved March 15, 2008, from http:/ /64.233.167.104/search?q=cache:nBWB4db4vX8J:petermonego.com/serious/writings/Economics/failures%2520of%2520the% 2520emh.doc+supporters+of+the+efficient+market+ hypothesis&hl=en&ct=clnk&cd=69&gl =usShadbolt, J., & Taylor, J. G. (2002). Neural networks and financial markets. New York: Springer. Retrieved March 12, 2008, from http://books.google.com/books?id=FltZ76gMmz8C&pg=PA237&dq=shadbolt:+neutral+networks+and+the+financial+markets&sig=HXgD75x8jMCEWKSgJDdkigD4rp4#PPA24,M1