Capital markets in financially sophisticated economies are not perfectly efficient because of

Question

Quizplus · Accepted Answer

Capital markets in financially sophisticated economies are not always efficient due to anomalous events such as unexpected news or geopolitical events, as well as irrational investor behavior that can lead to emotional decision-making instead of rational analysis. Therefore, both factors - anomalous events and irrational investor behavior - contribute to the imperfection of capital markets in such economies. The Sun Spot theory is not a widely accepted explanation for the inefficiencies of capital markets.

Capital Markets in Financially Sophisticated Economies Are Not Perfectly Efficient