Answer:-
Efficient Market Theory (EMT) suggests that financial markets reflect all available information, meaning stocks always trade at their fair value. This makes it impossible to consistently outperform the market through stock picking or timing. EMT has three forms: weak (prices reflect past data), semi-strong (prices adjust to public information), and strong (prices include all information, public and private). Critics argue that market bubbles and irrational behavior challenge this theory. Despite debates, EMT influences investment strategies, supporting passive investing like index funds, where investors aim to match the market rather than beat it. It remains key in financial economics.
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