Contents: Introduction - an overview of efficient market hypothesis, effectiveness of efficient market hypothesis, performance of the active portfolio. | With modern financial analysis, the efficient stock market is considered as ‘a market where stock prices can incorporate fundamental information about the companies’ (Degutis, 2014). Following the definition, the market value of the firm will fluctuate by the ‘intrinsic value' of the business. On the other hand, Goedhart and Koller (2010) said that due to the different in the transactions costs and the awareness of investors; these underlying information sometimes unable to cohered with the share prices which creates a gap between the intrinsic value of the firm and the market prices. Furthermore, there are many other studies which offer different perspectives on the matter also such as Eakins and Mishkin (2012), stated that asset prices will be coherence with available information in an efficient market which was supported by Brealey and Myers (2011). From the studies around EMH, there are two major findings; the first one is that in an efficient market; the market absorb the information fully and the second implication is about the low change of identifying anomalies.
