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(2009, 2900 words)
The paper defines what is meant by an efficient capital market discussing whether an efficient capital market renders capital structure and dividend policy redundant. The reductive view of investment is questioned explaining the benefits of having a sound capital structure and dividend policy even in an efficient market.
(2008, 2000 words)
The paper examines the forms of efficiency in capital markets providing their definitions and arguing whether market prices fully reflect information about the markets. Weak and strong market forms are discussed with reference to related academic sources and examples from the USA economy.
(2007, 1500 words)
This paper analysis the article "The development, accomplishments and Limitations of the Theory of Stock Market Efficiency" by Ray Ball. It critically analysis the theories related to the efficiency of stock markets, and provides a review of the literature relevant to the issue.
(2006, 2000 words)
The paper reports on the Pakistani financial markets reviewing the Efficient Market hypothesis (EMH), applying it to the UK and US stock markets, and analysing the current structure of the Pakistani financial sector, the evolution of the countryÌs capital markets, the factors inhibiting their growth, the informational infrastructure of the capital markets, etc.
(2006, 1000 words)
The efficient market hypothesis states that all relevant information is fully reflected in the current value of the security, meaning an investor is unable to benefit from the information available to make an abnormal return on the security. Does this hold true?
(2005, 2300 words)
This paper examines the market for 'Lemons Problem'. Here, this is analyzed using examples from traditional markets and e-markets such as e-bay and further it is demonstrated how Informational Asymmetries are handled in the real world transacting.
(2006, 1500 words)
The paper critically reviews the efficient market hypothesis (EMH) by Eugene Fama commenting on its inconsistencies and describing the market anomalies known as the January effect and the Weekend effect. The relevance of EMH to managers and investors’ decision-making is discussed.
(2006, 2000 words)
The paper examines the ‘random walk’ theory of price movements and the efficient market hypothesis (EMH) outlining the forms of market efficiency, the controversies related to market efficiency and the implications of EMH for investors and firms.
(2004, 1500 words)
The paper reviews the efficient markets hypothesis and behavioural finance theory arguing the existence of opportunities for excess returns and other supposed anomalies, and providing a review of literature on financial markets and investor psychology.
(2005, 1500 words)
The paper discusses the importance of market efficiency in financial reporting reviewing the efficient market theory and discussing the practices of manipulating earnings in order to maximize bonus compensation for managers. The incentives of creative accounting are outlined; the practices of telecommunications firms Vodafone (UK) and Global crossing (US) are reviewed.
(2005, 2000 words)
The paper presents an overview of the efficient market hypothesis outlining its forms and providing the analysis of the successful performance of the Fidelity Magellan fund over 1980 – 1995. The risk of investment in the Magellan fund is assessed.
(2005, 2800 words)
The paper discuss the notion that in the efficient market undervalued and overvalued shares do not exist, and therefore it is not possible to develop trading rules, which will beat the market by, say, buying identifiable under priced shares. If a share is traded on the stock market which is priced efficient this means that all investors know what a share is really worth. In response this piece considers the meaning of stock market efficiency and identifies three forms of efficiency supported by evidence to support their existence including a wide array of expert opinion and theory and continues to asses the implications of such markets for Companies finishing with a well balanced conclusion.
(2005, 2000 words)
The paper is devoted to the so-called peso problem, an unpredictable trend distorting logical inferences about fluctuations in the foreign exchange market. The market efficiency hypothesis (MEH) is critically analysed; the changes in Dutch guilder (DFL) and the Deutschmark (DM) exchange rates in the second half of the 20th century are discussed.
(2005, 1100 words)
This essay highlights the links between the Efficient Market Hypothesis and the Markowitz model for portfolio selection. The author shows that these two brilliant theoretical concepts are both based on the assumption of the investors rationality. This leads to the close connections between the two models. It is thoroughly described in the text how investors should behave if they follow theoretical models. On the other hand, the author of this essay shows that investors often deviate from rational behaviour, the feature which gave rise to the new branch of science called behavioural finance. Overall, it is shown in the paper that despite all flaws of both models they are still remaining “twin pillars” of finance theory since no better conceptions were invented.
(2005, 1500 words)
This paper presents the comprehensive analysis of the Efficient Market Hypothesis in the light of recent evidence. All three forms of market efficiency are discussed in the article with academic definitions and practical meaning. Then anomalies which are supposed to refute the Efficient Market Hypothesis are scrutinized. It is shown that absence of a model which could estimate normal returns may lead to spurious results and not necessarily mean that the Efficient Market Hypothesis is wrong. Moreover, the author illustrates other shortcomings of tests of market efficiency. Finally, he shows that even if the market is inefficient at the particular moment in time, eventually arbitrageurs will correct the situation and stock prices will come to their fair level. This paper will be useful for those who want to write about market efficiency with critical analysis of facts which clash with the Efficient Market Hypothesis.
(2005, 2700 words)
In the paper we discuss a number of very important topics in the modern financial theory. We explain the concept of market efficiency; describe what is it, its pros and contras. We also picture out the implication of the concept for corporative financing decision. We also explain the nature of the 'market bubble' with examples of 'tulip bubble' the bubble of The Southern Seas and pay special attention to the 'Dot-com bubble". We also evaluate a project on the purpose of acceptance in a particular situation via estimation of firm WACC (with using CAPM for equity capital cost) and estimate the value of business via discounted cash flow.
(2004, 2000 words)
The paper seeks to explain capital market behaviour concentrating on the processes behind the fluctuation of prices in the stock market. Efficient market hypothesis (EMH) is discussed in the context of other theories that challenge the random walk model. The concepts of market anomalies, noise trading and market behaviour are defined; conclusions are made about the predictability of stock returns.
(2003, 6500 words)
The paper attempts to analyse the reasons and causes of the rise and the fall of the Energy Industry via the Enron case. (Further information is available on a request)
(2002, 1700 words)
(2002, 3200 words)
´For a phenomenon to be an anomaly there has to be çconventional wisdomÌ which is violated by the phenomenonŽ. We begin by defining the term market efficiency and its three forms. We, then go on to describing, the methodology of testing for market efficiency, which leads us to asset market anomalies. After describing some of the most common anomalies, we will try to explain why these appear to exist. We can conclude that bad-model problems are unavoidable. They seem to be more serious problem when it comes to measuring long-term abnormal profits rather than short-term abnormal profits. Different models produce different abnormal returns. Fama argues that with reasonable changes of models usually makes an anomaly to disappear, for example, the January and small stock effects. Using value weighting instead of equal weighting of returns when comparing firms with different sizes also improves the results and minimises the incidence of an anomaly.
(2001, 2800 words)
The quote shows a strong relation to the efficient market hypothesis (EMH), as it implies that the costs of capital are dependent from the amount of information given by the company.
(2002, 3200 words)
´For a phenomenon to be an anomaly there has to be çconventional wisdomÌ which is violated by the phenomenonŽ. We begin by defining the term market efficiency and its three forms. We, then go on to describing, the methodology of testing for market efficiency, which leads us to asset market anomalies. After describing some of the most common anomalies, we will try to explain why these appear to exist. We can conclude that bad-model problems are unavoidable. They seem to be more serious problem when it comes to measuring long-term abnormal profits rather than short-term abnormal profits. Different models produce different abnormal returns. Fama argues that with reasonable changes of models usually makes an anomaly to disappear, for example, the January and small stock effects. Using value weighting instead of equal weighting of returns when comparing firms with different sizes also improves the results and minimises the incidence of an anomaly.
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