“Stock prices in Efficient Market.”?

Question

this question is regarding financial accounting . plz do comment.

Answer 1

I am not certain what stock prices, efficient markets and financial accounting have in common. I personally do not believe the markets are efficient. They are too much ruled by fear and greed to be so. Financial accounting enters the picture only in accounting for the value of investments in stocks. I am not certain what the accounting rules are currently. At one time the were either carried on the books at purchase price or at mark to market price.

Answer 2

There are three kinds of efficient markets.
1) Weak form efficient where the price of the stock reflects the past information available.
2)Semi strong form efficent where the price of the stock reflects the present information available on the stock.
and
3)Strong form efficient where the stock prices reflects the future infromation available ont the stocks.

Answer 3

In an efficient market, stock prices would reflect precisely the value of the firm. This is because all information is known about the firm and the environment in general.