12.5 Market Efficiency Efficient Capital Markets- Financial markets in which security prices rapidly reflect all relevant information about asset values Random Walk - Security prices change randomly, with no predictable trends or patterns Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001©The McGraw-Hill Companies, Inc.,2001 12- 5 Irwin/McGraw-Hill Market Efficiency Efficient Capital Markets - Financial markets in which security prices rapidly reflect all relevant information about asset values. Random Walk - Security prices change randomly, with no predictable trends or patterns