Two fundamental tenets make up the efficient market hypothesis. EMH first asserts that public information gets reflected in stock prices without delay. Information that should beneficially (or adversely) affect the future price of any financial instrument will be reflected in the asset’s price today. If a pharmaceutical company now selling at $20 per share receives approval for a new drug that will give the company a value of $40 per share tomorrow, the stock price will move to $40 right away, not slowly over time.
