ermanent and Temporary Components of Stock Prices

ermanent and Temporary Components of Stock Prices Dissertation example
Masters
Dissertation
Finance & Accounting
Pages 12 (3012 words)
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Research Proposal Event Study for Efficient Market Hypothesis – Ex Dividend Data Finance and Accounting Student name Table of Contents Abstract 3 Efficient Market Hypothesis 4 Types of Market Efficiency 5 Literature Review 6 Purpose of the study 9 Event to be studied 9 Indian equity market 10 Why India?…

Introduction

Just follow this strategy, or here’s the hottest new stock guaranteed to make money. A large industry is devoted to providing information to investors so they can make decisions about their investments. An important issue in corporate finance involves the inferences the market draws from managerial decisions. Market efficiency is a very important hypothesis for investors who want to build a diversified portfolio. Recent empirical studies document stock price responses to announcements of events like dividends, stock-split and capital structure changes. A plausible explanation for these findings is that changes in the optimal dividend and debt levels stem from changes in, expected cash flows, and thus, signal a change in firm value. This research aims to test the efficient market hypothesis in the context of Indian stock market. We will study the same with ex-dividend declaration in the Indian stock markets. Keywords: Efficient market hypothesis, Random walk hypothesis, Indian stock market Efficient Market Hypothesis The theory ‘efficient market’ was formulated by Eugene Fama in 1970. He described an efficient market as a market where at any point in time, actual prices of individual securities already reflect the effects of information based both on events that have already occurred and on events which, as of now, the market expects to take place in the future. ...
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