According to Aswath Damodaran, In order for markets to be more efficient, the following three conditions must exist:
1. If trades can’t be executed then markets will be inefficient. Thus, trading should be “both inexpensive and easy.”[i]
2. Information about the firms should be wide, deep and freely available.
3. Caveat Emptor: Buyers should reap the rewards and suffer the slides of an investment.
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[i] Damodaran, Aswath. Applied Corporate Finance, p 42, John Wiley and Sons, 2006, Hoboken, New Jersey
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