Inefficient Market

The notion of inefficient market is the negation of the so-called efficient market hypothesis (EMH). If EMH holds, then the price of a security will always reflect its true value since all information that could impact the price is freely available and therefore already reflected in the price. An inefficient market thus suggests the price of a given security does not reflect its value. This can result from information gaps driven by delays in its dissemination, from investors mis-interpreting the nature of the information, or as a result of behaviourial factors that lead to irrational investment decisions.