Minimum efficient scale
Minimum efficient scaleThe smallest output of a firm consistent with minimum average cost. In small countries, in some industries the level of demand in autarky is not sufficient to support minimum efficient scale.
Efficient market theoryEfficient market theory
The theory that claims that the current price of a share reflects everything that is known about the company and its future earnings potential, and that is it impossible to beat the market consistently.Efficient market theory suggests that the army of analysts and fund managers in the City whose job is to actively manage superior-performing portfolios are engaged in a futile exercise because everything they find out is rapidly transmitted around the market, and share prices instantly reflect the common knowledge. In other words, no one can get one up on anyone else. And the logical extension of this is that passive funds - tracker and index funds - are the best place to park your money, because their management costs are much lower and they are mathematically structured to match the performance of their chosen index.Plenty of people disagree with efficient market theory, and their ranks include people like Warren Buffett who has consistently produced returns of over 20% on his portfolio over a 30 year period.
Earnings response coefficientEarnings response coefficient
A measure of relation of stock returns to earnings surprises around the time of corporate earnings announcements.
Efficient marketEfficient market
Economy in which prices correctly reflect all relevant information.
Efficient diversificationEfficient diversification
The organizing principle of modern portfolio theory, which maintains that any risk-averse investor will search for the highest expected return for any particular level of portfolio risk.
Coefficient of VariationCoefficient of Variation
A measure of investment risk that defines risk as the standard deviation per unit of expected return.
Further SuggestionsEfficient capital market
Efficient markets theory(EMT)
Operationally efficient market
Information Coefficient (IC)
Internally efficient market
Coefficient of determination