Eugene F. Fama's article "Efficient Capital Markets: II" revisits the literature on market efficiency, focusing on the hypothesis that security prices fully reflect all available information. The author acknowledges the challenges in testing this hypothesis due to the joint-hypothesis problem, which involves testing market efficiency alongside an equilibrium-pricing model. Despite these challenges, Fama argues that the empirical literature on market efficiency has made significant contributions to our understanding of security return behavior. The article is divided into several sections, each addressing different aspects of market efficiency. The first section discusses the main areas of research, including return predictability, event studies, and tests for private information. The second section delves into return predictability, examining whether past returns, dividend yields, and other variables can predict future returns. Recent studies have shown that these variables can explain a significant portion of the variance in returns, particularly for long-horizon returns. The third section reviews event studies, which examine how quickly security prices reflect public information announcements. These studies generally support the hypothesis of market efficiency, providing direct evidence on efficiency. The fourth section discusses tests for private information, suggesting that corporate insiders have private information that is not fully reflected in prices. However, the evidence on professional investment managers is less clear due to the joint-hypothesis problem. The fifth section explores volatility tests and seasonals in returns, noting that while these tests have not provided clear evidence on market efficiency, they have helped identify patterns in expected returns that may be rational. The sixth section focuses on cross-sectional return predictability, reviewing tests of asset-pricing models such as the Sharpe-Lintner-Black (SLB) model, multifactor models, and consumption-based models. These models have helped identify anomalies in security returns, which have been used to develop new asset-pricing theories. Overall, Fama concludes that the empirical literature on market efficiency has been successful in improving our understanding of security return behavior, despite the challenges posed by the joint-hypothesis problem. The research has led to a deeper understanding of the time-series and cross-section behavior of security returns, even if precise inferences about market efficiency remain elusive.Eugene F. Fama's article "Efficient Capital Markets: II" revisits the literature on market efficiency, focusing on the hypothesis that security prices fully reflect all available information. The author acknowledges the challenges in testing this hypothesis due to the joint-hypothesis problem, which involves testing market efficiency alongside an equilibrium-pricing model. Despite these challenges, Fama argues that the empirical literature on market efficiency has made significant contributions to our understanding of security return behavior. The article is divided into several sections, each addressing different aspects of market efficiency. The first section discusses the main areas of research, including return predictability, event studies, and tests for private information. The second section delves into return predictability, examining whether past returns, dividend yields, and other variables can predict future returns. Recent studies have shown that these variables can explain a significant portion of the variance in returns, particularly for long-horizon returns. The third section reviews event studies, which examine how quickly security prices reflect public information announcements. These studies generally support the hypothesis of market efficiency, providing direct evidence on efficiency. The fourth section discusses tests for private information, suggesting that corporate insiders have private information that is not fully reflected in prices. However, the evidence on professional investment managers is less clear due to the joint-hypothesis problem. The fifth section explores volatility tests and seasonals in returns, noting that while these tests have not provided clear evidence on market efficiency, they have helped identify patterns in expected returns that may be rational. The sixth section focuses on cross-sectional return predictability, reviewing tests of asset-pricing models such as the Sharpe-Lintner-Black (SLB) model, multifactor models, and consumption-based models. These models have helped identify anomalies in security returns, which have been used to develop new asset-pricing theories. Overall, Fama concludes that the empirical literature on market efficiency has been successful in improving our understanding of security return behavior, despite the challenges posed by the joint-hypothesis problem. The research has led to a deeper understanding of the time-series and cross-section behavior of security returns, even if precise inferences about market efficiency remain elusive.