Capital Market Efficiency For Finance Managers

The weekly performance of IBM stock presented a contestant growth. One highlight of the falling of stock price in the 6th week in the investment period was when IBM presented the 3rd quarter financial report. The investors weren’t satisfied with the profit report which they expected to be better especially when other IT companies were doing well in the 3rd quarter. One mistake I made was that I didn’t follow closely to the financial report of the company; therefore, I missed the peak of the stock price. From this experience, I learned that financial reports and current news are important indicators of the stock price. By following closely to the current event and analyzing the financial report, investors can maximize the profit and also become more familiar to the market.

Advantages- Less liability for stakeholders. Ability to raise funds/capital in the form of stocks as needed.

The basis of Efficient Market theory is considered to have a gap in theory and practice that

As Chapter 10 questions, if further evidence continues to surface that capital markets do not always behave in accordance with the efficient market hypothesis, then should we reject the research that has embraced the EMH as a fundamental assumption? In this regard we can return to earlier chapters of this book in which we emphasised that theories are abstractions of reality. Capital markets are made of individuals and as such it would not (or perhaps, should not) be surprising to find that the

In order to succeed in any business, it is extremely important to understand the stock market. In this assignment we were asked to follow the stock market continuously for four months and understand the market. The stock market is a global marketplace, where goods and services are traded in the form of equities.

Then that response is measured as to negative and positive impact to discern a mean level which is normal for that individual (Zimbardo &Johnson, 2009, pg. 53).

When investing in a company, the goal is to buy shares at a low price and then sell them at a higher price. Individual stocks may go up or down independent of how “The Market” is doing overall. Stock market indices such as the Dow Jones Average, the NASDAQ, and the Standard and Poors 500 report how “The Market” is doing “on average.” To check

““The name of the game, moving money from your clients pocket to your pocket”, Mark stated. “But if you can make your clients money at the same time it’s advantageous to everyone, correct?” “No, Mark replied…Okay, first rule of Wall Street-nobody and I don’t care if you are Warren Buffet or Jimmy Buffet- knows if a stock is going up, down or sideways, least of all stock brokers. But we have to pretend we know.”” (8)

Research of social impact of events is one of the emerging topics in event management literature and has a great degree of importance for a variety of different reasons considering their short term, high profile and a relatively profound effect on everyday life of local communities. (Ritchie

For example, Manna (1966) states that insider trading should be allowed because insider trading is the most effective way to compensate to insider to generate new economic information in firm. Hirshleifer() states that for insider, good information is as good as bad information to make profit but this profit may not be related to economic contribution of insiders in corporate. Proponents of insider trading suggest (Carlton and Fischel (1983) that insiders are the most informative member in the market, and by trading, they bring new information to the markets and causing prices to change toward their true value and, therefore, promoting the optimal allocation of resources. On the other hand, Scholars (Benabou and Laroqu, 1992) say that insider trading may provide incentive to corporate insiders either to delay the announcement of price-sensitive information to public or to prevent to release price sensitive information, which in turn makes stock prices less informative. However, Georgakopoulos (1993) argues that restriction on insider trading may have little adverse impact on market efficiency but it reduces the cost of transaction that burdens on uninformed traders

7. Hypothesis Testing: The formulated hypothesis in the study that whether abnormal returns are generated by stock split was tested by conducting paired sample t test using SPSS for the sample of companies for period ranging from -60 to +60 days. The two variables compared were the normal returns and the expected returns ( based on BSE returns)

Efficient capital market “It was generally believed that securities markets were extremely efficient in reflecting information about the stock market as a whole” (Fama 1970). To extent that when there is new information about stock rise, the news was dispersed immediately and it affects the security 's price at that time.

* Stock prices change only when there is new info- cannot be predicted ahead of time

A key aspect of economics is the collection and analysis of the vast amounts of data generated throughout global economies. The interpretation of this data can provide important signals for the future direction of the economy. There are two forms of signals that arise from the various economic data that is collected. The first are direct signals, which measure the movement in what is being measured. These usually take the form of a given macro indicator.

Market Efficiency: An Empirical Analysis of KSE 100 Index Haroon Mahmood (Shaheed Zulfikar Ali Bhutto Institute of Science and Technology) haroonmahmood29@gmail.com Dr. Kashif ur Rehman Iqra University Abstract In an efficient market, the actions of the many competing participants, leads to actual prices already reflecting the effects of current information and the actual price of a security to wander randomly about its intrinsic value. The fact that the market is efficient is important for the public economy when it comes to the distribution of scarce resources as it acts as an intermediary of capital distribution from savers to investors through the mechanism of price.