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Chapter 7 Rational Expectations, Efficient Markets, and the Valuation of Corporate Equities
Chapter Objectives
By the end of this chapter, students should be able to:
- Explain when expectations are rational and when they are irrational.
- Explain how corporate equities (stocks, shares of a corporation) are valued.
- Explain what is meant by the term market efficiency.
- Describe the ways in which financial markets are efficient.
- Describe the ways in which financial markets are inefficient.