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Excel Finance Class 102: In The Short Run Financial Markets Can Be Inefficient Mispriced Assets


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In the Short run financial markets can be inefficient. Markets Are Efficient Only In The Long Run - in that prices eventually tend to correct. In the short run prices can be incorrect and resources can be misallocated. In this regard (because markets can have incorrect prices (think of CDO) and misallocate resources), markets are never efficient. But that sort of makes sense because we are human, and we make mistakes, and we do not always act in a reasonable way, whatever reasonable means...





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