The stock market, The Theory of Rational Expectations and the Efficient Market Hypothesis - Information, competition and the Stocks markets - Behavioural Finance

4 important questions on The stock market, The Theory of Rational Expectations and the Efficient Market Hypothesis - Information, competition and the Stocks markets - Behavioural Finance

What is short selling? And when is it allowed?

Selling a stock that you don't have (borrowing)
Not for small investors but large institutions

How can the large trading volume be explained?

By investor overconfidence.

How can stock market bubbles be explained?

By overconfidence and social contagion.
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What is behavioural finance?

Study that seeks to combine psychology, sociology and traditional finance. To explain why people make irrational decisions.

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