The System of Capital Market Efficiency Theory

The core of Efficient Market Hypothesis (EMH) is that the price on any time point in the securities market is the best evaluation of the intrinsic value of securities. Provided that there are sufficient investors that are ready to acquire freely all the information available, the market can be efficient. Research on the microcosmic market i.e. transaction efficiency has been taken into the system of the market efficiency theory. This paper proposes that macrocosmic function efficiency should be also taken into the system of the market efficiency theory. Accordingly, market efficiency is divided into three aspects: transaction efficiency (micro-study), price-fixing efficiency (EMH) and function efficiency (macro-study).