1500 words

Please can you make sure that references are good as last time i had to add new references as they weren’t good enough and in Harvard style

Please follow all the points written and don’t forget anything as i won’t have time to revise just do it from first time good following the instruction

It has to be critically evaluated and show understanding of the topic in full. Make sure to explain everything i asked for don’t forget anything at all

Statement :

“Of course the market is not efficient. I know lots of people from technical analysts to professional fundamental analysts who have made packets of money on the market”. Moreover, buy and hold policy is good as any other so is not necessary to follow and keep up with the fundamental of the company in which you own securities”

Required:

Critically evaluate the above statements, in the context of the Efficient Market Hypothesis and the three levels of efficiency.

Introduction

· What is capital market efficiency

· Identify what you will cover

· Address the statement

· Explain that the question is about Efficient Market Hypothesis (EMH)

Main body

· What is Efficient Market Hypothesis (EMH) with a good reference((fama )

· The theory?

· To be efficient the market should have the following features: analyse them

· Allocative,

· operational

· informational

· What are the three forms of Efficient Market Hypothesis (EMH) full explanation, analysis and Testing for market Efficiency.

· Weak

· Semi-strong

· Strong (why is difficult to test this form )-Discuss that it is not possible to test whether a stock market is strong form efficient. In fact the existence of insider trading proves otherwise.

· What are the characteristic of a perfect market

· What are the implications of the Efficient Market Hypothesis for :

· Investors

· Company and Managers

· What is the importance of efficient market hypothesis for:

· Shareholders concerned about maximising their wealth

· Corporate financial manager making capital investment decision

· Explain Technical and Fundamental analysis according to the statement above:

· Technical analysis is linked to weak form – if markets are weak-form efficient then investors will not make more than average returns by technical analysis.

· If markets are semi-strong efficient, then investors will not make more than average returns from fundamental analysis.

· But a market without analysis – both sorts – would be less efficient, so still worthwhile. Also just because stocks are priced efficiently does not mean there are not good and bad stocks. Therefore random choice is bad idea

· WHAT is the Buy and Hold policy for investment managers and private individuals investors ?

· Recent capital market Efficiency research has explored anomalies in share price behaviour, briefly describes some of these and suggests possible explanation.

· What happens if efficiency doesn’t work? The mechanism will break and there will be some issues?

Very short conclusion

Reference