efficient market hypothesis?
Q. explain the three forms of market efficiency put forward put by Fama(1970)
Asked by proper - Sun Nov 2 17:25:13 2008 - - 1 Answers - 0 Comments

Market anomalies that directly contradict the Efficient Market Hypothesis ?
Q. What are some market anomalies that directly contradict the Efficient Market Hypothesis, in other words were investors are able to achieve systematically higher returns by trading on technical and statistical data. Could you also list a source/website. Wikipedia has not much on the subject. Thanks
Asked by tenno1234 - Wed Dec 5 22:22:57 2007 - - 1 Answers - 0 Comments

A. I am not sure what you mean by "anomalies". The Efficient Market Theory is just that - a theory. Most scholars can't pick stocks if their life depended on it. The markets trade on fear and greed which creates endless opportunities - if you know where to look.
Answered by slavaret2 - Thu Dec 6 02:05:07 2007

Arguments for and against EMH: Efficient market hypothesis?
Q. I need two article about the EMH efficient market hypothesis. Does anyone know two articles in peer reviewed journals, one supporting EMH and one criticising iit? Thanks
Asked by Stephen D - Sun Oct 12 23:19:16 2008 - - 1 Answers - 0 Comments

A. The classic article outlining and supporting the EMH is available here: A good outline of the critique of the EMH is available in the following book: Shleifer, Andrei (1999) Inefficient Markets: An Introduction to Behavioral Finance, Oxford University Press Finally, the Adaptive Market Hypothesis, as proposed by . Andrew Lo (2004), is a new framework that attempts to reconcile theories that imply that the markets are efficient with behavioral alternatives, by applying the principles of evolution - competition, adaptation, and natural selection - to financial interactions.
Answered by Felix_FINA4242 - Tue Oct 14 17:30:19 2008

question about efficient market hypothesis?
Q. Among weak-form, semi- strong form and strong-form of efficient market hypotheses, which hypothesis is most difficult to test and most likely to be rejected and why?
Asked by Olivia Wayda - Tue Jul 7 05:56:59 2009 - - 1 Answers - 0 Comments

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Answered by Subodh - Tue Jul 7 06:32:50 2009

Discuss the following statement in relation to the efficient market hypothesis?
Q. On the day a firm announces a large increase in its earnings, the firm s stock price drops relative to the market
Asked by conchur - Tue May 25 09:11:58 2010 - - 2 Answers - 0 Comments

A. That should be covered in your reading, or easily uncovered in reference material. But the efficient market hypothesis is just a theory; a crock, really, because there are times when the market isn't efficient at all, like during the flash crash. It doesn't explain or encompass outside events like the debt crisis or war or other Black Swan events. So what good is it except a good exercise? You can theorize all day long, but it doesn't make you any money. This question is asked often here. Just type "efficient market hypothesis" into the Answers search box and you'll get lots of answers.
Answered by b2fnow - Tue May 25 11:48:17 2010

what kind of topic - dissertation can i write on Efficient Market Hypothesis? Any ideas? :)?
Q. I would be very thankful for any advices :)
Asked by Phil - Thu Aug 13 09:52:04 2009 - - 1 Answers - 0 Comments

A. I'm sorry, but I have no suggestions. ~*~~*~
Answered by Florida Sandspur - Thu Aug 13 09:55:39 2009

weak-form of the efficient market hypothesis question?
Q. The weak-form of the efficient market hypothesis states that... a. Successive price changes are dependent. b. Successive price changes are independent. c. Successive price changes are biased. d. Successive price changes depend on trading volume. e. Properly specified trading rules are of value.
Asked by Will B - Mon Dec 17 18:18:04 2007 - - 1 Answers - 0 Comments

A. b. The hypothesis implies that successive price changes have no relationship to past prices. Prices change as a result of new information entering the market and investors acting to take advantage of it. Their collection action causes the price to change, without regard to any prices that existed in the past.
Answered by Serge M - Mon Dec 17 20:45:32 2007

What kind of topic - dissertation can i write on Efficient Market Hypothesis? Any ideas? :)?
Q. What kind of topic - dissertation can i write on Efficient Market Hypothesis? Any ideas? :)?
Asked by Phil - Thu Aug 13 10:36:43 2009 - - 2 Answers - 0 Comments

semistrong-form efficient market hypothesis question?
Q. According to the semistrong-form efficient market hypothesis, which of the following types of information are fully reflected in stock prices? a. Rates of return, trading volume, and news about the economy. b. Dividend and earnings announcements. c. Rates of return, trading volume, and block trades. d. Earnings announcements and rates of return. e. All of the above.
Asked by steve - Mon Dec 17 18:10:58 2007 - - 1 Answers - 0 Comments

A. E. All of the above. Semi-strong says that technical and fundamental information is incorporated in stock prices.
Answered by StopSpending - Mon Dec 17 18:13:31 2007

Are there any investments that defy the "efficient market hypothesis?" This is what I meant to ask. . .
Q. I previously asked, "Which specific short term investment produces the highest yield at the lowest possible risk?" VlueDevil gave an excellent response, "You should be aware that the higher the yield, the higher the risk... This is true for all investments or else everybody would flock to these low-risk high-yield investments. This is because of the 'Efficient market hypothesis' -finance 101" I'm looking for the money growing on trees scenario? Anybody feel they are onto the next big thing?
Asked by djct - Sat Dec 17 01:19:15 2005 - - 2 Answers - 0 Comments

A. In any business deal (or investment), try to figure out who is "the sucker" in the deal/investment. If you don't know who the sucker is, that means the sucker is you.
Answered by Adventure - Sat Dec 17 02:44:46 2005

Having trouble with the efficient markets hypothesis?
Q. Suppose that the best forecasts predict that in the upcoming year a share of IBM stock will pay a $3 dollar dividend and that the stock will have a market price of $30. If investors demand a rate of return of 10 percent, under the efficient markets hypothesis how much would investors pay for the stock today?
Asked by Jason Shore - Thu Oct 29 23:46:31 2009 - - 1 Answers - 0 Comments

Question on Efficient market hypothesis. Please help?
Q. Which of the following observations regarding stock price would contradict the weak form of Efficient Market Hypothesis? A. The average rate of return is significantly greater than zero. B. The correlation between the market return one week and the return the following week is zero. C. You could have consistently made superior returns by buying stock after a 10% rise in price and selling after a 10% fall. D. You could have consistently made superior returns by forecasting future earnings performance with your new Crystal Ball forecast methodology. E. The covariance between a stock return one week and the return the following week is zero. F. None of the above
Asked by josieyuen04 - Sat Aug 15 16:17:59 2009 - - 1 Answers - 0 Comments

A. B
Answered by dmaniscool21 - Sat Aug 15 18:44:12 2009

What are the implications of the efficient market hypotheses?
Q. Briefly discuss why some economists believe in this hypothesis while others are skeptical of it.
Asked by cloutier1031 - Mon Mar 26 20:07:19 2007 - - 1 Answers - 0 Comments

A. Believers:If Efficient market hypothesis didn't exist then there would be arbitrage opportunities present in the market. Operators will exploit this opportunity (thus make money) and thus would gradually wipe out this arbitrage. Thus now there should be no arbitrage opportunity present(atleast in long run) In practice, there are minute arbitrage opportunities present and Hedge Funds survive on this opportunity. But as explained above this are momentarily and are very soon exploited.
Answered by TechMBA - Mon Mar 26 20:16:48 2007

If the efficient markets hypothesis is true, then:?
Q. The efficient markets hypothesis uses the assumption of rational expectations to model how investors form their expectations about the rate of return on assets. A. If a stock performs well today, it will perform well in the future. B. If stock prices reflect market fundamentals, one investment is just as good as another. C. Future changes in stock prices are predictable, because stock prices follow a random walk. D. Investors who use technical analysis generate abnormally high returns from buying and selling stock. E. There are unexploited profit opportunities in financial markets.
Asked by MO - Sun Feb 28 23:39:28 2010 - - 1 Answers - 0 Comments

A. B But the theory or "hypothesis" is flawed, so the entire premise of the question is flawed.
Answered by b2fnow - Mon Mar 1 02:55:18 2010

Are fundamental analyst wasting their time operating in a semi-strong efficient market?
Q. When I say fundamental analyst I am refering to, Fama, Keane, Jensen, Fisher etc (and many more) and their theories about the Efficient Market Hypothesis.
Asked by aneres142002 - Tue Dec 12 13:59:27 2006 - - 3 Answers - 0 Comments

A. I am not really an efficient market proponet. So no I do not believe fundamental analysis is a waste of time. In fact I believe the market is very inefficient. Hot stocks are overbought and stocks that are not hot are left to languish. A decent fundamentalist can pick out the languishers that are tomarrow's hotties.
Answered by muncie birder - Tue Dec 12 16:20:09 2006

Help regarding efficient market hypothesis?
Q. I would appreciate some help on EMH. How do you do this question? I would appreciate if someone give some guidance on how to do this question. Thanks! The government of Kuwait offered to sell 170 million British Petroleum shares, worth about $2 billion. Goldman Sachs, a U.S investment banker, was contacted after the stock market closed in London and given one hour to decide whether to bid on the stock. They decided to offer 710.5 pence ($11.59) per share and Kuwait accepted. Then Goldman Sachs went looking for buyers. They lined up 500 institutional and individual investors worldwide, and resold all the shares at 716 pence ($11.70). The resale was complete before the London Stock Exchange opened the next morning. Goldman Sachs made $15… [cont.]
Asked by Jeanne - Tue Nov 10 03:21:28 2009 - - 1 Answers - 0 Comments

A. Move this question to homework help.
Answered by stressedandconfused - Tue Nov 10 03:26:36 2009

The efficient markets hypothesis states that:?
Q. The efficient markets hypothesis states that: a. Spending time and money analyzing stocks is unlikely to raise your portfolio's rate of return. B. The irrationality of people's actions provides opportunities for profit in the stock market. C. Stock prices "walk" or move in a predictable path. D. You should only invest in companies that produce goods and services in an efficient manner.
Asked by cross_moon46 - Fri May 2 17:30:58 2008 - - 2 Answers - 0 Comments

According to the "weak form" of the Efficient Markets Hypothesis (EMH), past share returns...?
Q. should not enable an investor to predict future returns.what is the the reasoning behind this??
Asked by amz - Tue Feb 26 12:31:05 2008 - - 1 Answers - 0 Comments

A. My understanding, which is in the simplest of terms, is that weak form efficient markets theory assumes that all of this historical information is already accounted for in the trading price of the security. Say an investor can look back at historical revenues for a company and determine that when X happens to revenue, Y happens to the share price. In a market that is weak form efficient, everyone already has this information and it's already reflected in the share price. Similarly, in semi strong form efficient markets, the stock price incorporates public information in the same way. For example, if a company announced a new product that is going to yield certain future cash flows, the present value of those cash flows is immediately… [cont.]
Answered by cornfedwhiteboy72 - Tue Feb 26 15:53:16 2008

How do you compare a stock to a random walk?
Q. I have a project that requires me to consider my company's stock (Abbott Laboratories) in terms of the Efficient Market Hypothesis. Then compare my historical price chart to a random walk of the industry and the market as whole. My question is where do I get the information for this random walk comparison?
Asked by jav - Sat Jun 26 00:32:22 2010 - - 1 Answers - 0 Comments

Can a highly intelligent individual significantly beat the market trading?
Q. Assume somebody with an unusually high iq and a substantial understanding of gambling mathematics, finance, and economics. Assume this individual would be working with total capital of approximately $100k and would work from his home office. Assume this individual could devote several hours per day if necessary. Realistically, is there a reasonable way this individual could master getting in and out of investments in a way that leads to a significantly higher return than the general market? I am pretty well versed in the efficient market hypothesis, and I generally think that short-term trading is little more than flipping coins with transaction costs. But there clearly are entire firms set up that apparently make money trading the… [cont.]
Asked by DJP - Wed Jan 30 16:40:44 2008 - - 14 Answers - 0 Comments

A. Contrary to most of the others who have answered before me, I think that you have to be a complete idiot to lose money in the stock market. The only way that I can see, that people lose money, is because they panic, or they do things which are really, really, stupid. You'll never go broke betting on the stupidity of others. I only have a tenth grade education, but I make a good living in the stock market, by simply letting really "intelligent" people, give me money.
Answered by Shake'n'bake - Thu Jan 31 03:24:59 2008