Why academics say the market is efficient?
While the academic approach is to present the capital market as efficient, our experience also tells us that this is generally true. The basic theorems arising out of market efficiency are that first, the price of a security fully reflects all available information and second, the value of a whole is the sum of the value of all individual pieces. The first of these theorems essentially proposes that there is no investment asset with a positive net present value, where you can make abnormal profits, because the price of an asset is no more or less than what the asset is worth. The second of these theorems advances a mathematical relationship that the price of a final security is the sum of the prices of other component securities, which makes up the final security.
