The EMH states that all available information is reflected in the prices of securities, meaning that it is impossible to consistently outperform the market by buying and selling stocks.

Weak-form efficiency refers to the idea that all past price information is reflected in the current price of a security.

Semi-strong-form efficiency refers to the idea that all public information, such as earnings announcements and news events, is reflected in the prices of securities.

Strong-form efficiency refers to the idea that all information, including private information, is reflected in the prices of securities.

If the EMH is true, it means that it is impossible to consistently outperform the market, so investors should focus on long-term investments and diversify their portfolios.

The EMH is challenged by the existence of insider trading, the presence of behavioral biases among investors, and the impact of macroeconomic events on stock prices.

Despite the challenges, many investors still believe in the EMH because it provides a simple and elegant framework for understanding financial markets, it is supported by a large body of empirical evidence, and it is the foundation of modern portfolio theory.

The random walk theory states that stock prices follow a random pattern, meaning that it is impossible to predict future prices based on past prices.

The random walk theory implies that it is impossible to consistently outperform the market, so investors should focus on long-term investments and diversify their portfolios.

The random walk theory is challenged by the existence of market anomalies, the presence of behavioral biases among investors, and the impact of macroeconomic events on stock prices.

Despite the challenges, many investors still believe in the random walk theory because it provides a simple and elegant framework for understanding financial markets, it is supported by a large body of empirical evidence, and it is the foundation of modern portfolio theory.

The random walk theory is a weaker version of the EMH because it only states that stock prices follow a random pattern, while the EMH states that all available information is reflected in the prices of securities.

The relationship between the EMH and the random walk theory implies that it is impossible to consistently outperform the market, so investors should focus on long-term investments and diversify their portfolios.

The relationship between the EMH and the random walk theory is challenged by the existence of market anomalies, the presence of behavioral biases among investors, and the impact of macroeconomic events on stock prices.

Despite the challenges, many investors still believe in the relationship between the EMH and the random walk theory because it provides a simple and elegant framework for understanding financial markets, it is supported by a large body of empirical evidence, and it is the foundation of modern portfolio theory.