A market is efficient with respect to a particular set of information if it is impossible to make abnormal profits

A market is efficient with respect to a particular set of information if it is impossible to make abnormal profits Essay example
Masters
Essay
Finance & Accounting
Pages 6 (1506 words)
Download 0
Behaviors of Stock Markets Date: Behaviors of Stock Markets Outline Introduction Market Behaviors Market Inefficiency Weak form efficiency Semi Strong form efficiency Strong form efficiency Practical researches on Capital markets Market Conclusions and practical situations Conclusion Bibliography Introduction The first part of this assignment is based on the efficiency of stock markets…

Introduction

Second part of the essay contains on a market conclusion about the practical behaviors of stock markets in relation with stock movements. This debate also include the information of the market behavior that in which circumstances an investor can make abnormal profits and in which conditions it is not possible to make abnormal gains and profits. It this part, debate is also made on the question that either market is efficient or not. The last part of this assignment is based on a general conclusion about this study. Topic: A market is efficient with respect to a particular set of information if it is impossible to make abnormal profits by using this set of information to formulate buying and selling decisions. The efficiency of the stock market is based on the efficient market hypothesis. Many investors believe that they can select stock with the help of their forecasting and valuation techniques and can make abnormal profits easily. On the other side the efficiency market hypothesis states that all the stock prices are based on all the accurate information and reflect the full and fair information. ...
Download paper
Not exactly what you need?

Related papers

Efficient Market Hypothesis: Is the Stock Market Efficient?
Pesendorfer, 2006; Lim and Tan, 2003; Lo and Mackinlay, 1999), EMH remains one of the major building blocks of modern finance. This theory asserts that the financial markets are "informationally efficient", which means the current prices of assets (i.e., stock, bonds) reflect all the available information. The EMH view of the market is that, when information arises, it spreads very quickly and…
Stock Market Efficiency: Is the UK Capital Market Really Efficient?
The aims and objectives of the research elucidate and make specific the means of the exploration and analysis. In fact, the methodologies used in following the line of investigation was the primary sources that include personal observations of the researcher, telephonic and personal interviews with influential capital marketplace personals, company managers, several brokers; and secondary sources…
Essay: Study on Efficient Market Hypothesis
Different forms of efficient hypothesis, i.e. weak, semi-strong and strong, will be critically analyzed to identify why different forms of market efficiency lead to major issue in fundamental analysis of companies. Implications of weak or semi strong market efficiency will be discussed with evidence. Lastly, arguments on efficient market efficiency will be addressed on behaviour finance…
Efficient Market Hypothesis
The efficient market theory assumes that there are no transaction costs, money market is not segmented and it is easy to enter the money markets. Efficient market hypothesis is explained in three ways. First, there is weak form efficiency. Weak form efficiency stipulates that all past information that is available in public domain is a reflection of stock prices. The prices are considered unbiased…
Efficient Market Hypothersis
While the extent of the validity of these criticisms remains debated, the efficient-market hypothesis (EMH) has held a pronounced influence on political and academic thought. This essay considers the extent that the market, as Warren Buffet claims, functions under irrational processes, or can be explained in rational terms through the efficient market hypothesis. Outline of the Efficient Market…
Efficient Market Hypothesis
Among the foremost to apply digital computers to perform empirical research in the field of finance, Fama operationally defined the EMH by pointing structure on several information sets accessible to market players. The efficient-market hypothesis necessitates that the agents should expect rationally that on average the overall population is correct (although if no individual is) and each time new…
Corporate performance, abnormal profits and sectoral differences
Whereas some people consider the quantity of firms assets as an indicator of its performance, economists use different approaches such the efficiency in which firm or industry utilize its resources to generate income. Firms operating in the same industry exhibit dissimilar performance while even firms operating under different industries have depicted similar performance trends (Rumelt, 1991,…