EVOLUTION OF STOCK MARKET EFFICIENCY OVER TIME: A SURVEY OF THE EMPIRICAL LITERATURE Kian-Ping Lim Universiti Malaysia Sabah and Monash University and Robert Brooks Monash University Background This paper provides an insight into the empirical literature as pertains the evolution of stock market efficiency over time, with a keen focus on the weak form Efficient Market Hypothesis (EMH). The authors provide a systematic review of the correlation between several financial factors namely: Adaptive
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Lecture 3 1. Assume you purchased 700 shares of XYZ common stock on margin at $50 per share from your broker. If the initial margin is 65%, how much did you borrow from the broker, what is the margin? 2. You purchase 100 shares at $60 per share and margin = 50%. Suppose stock rises to $80/sh (increase of 33%). What is your return? Suppose stock drops to $40/sh (decrease of 33%). What is your return? 3. Investor opens a brokerage account and purchases 300 shares of XYZ at $40 per share. She borrows
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USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS Jackie has a margin account with a balance of $150,000. If the initial margin deposit is 60 percent and Turtle Industries is currently selling at $50 per share: (a) 1 How many shares of Turtle can Jackie purchase? (b) 2 What is Jackie's profit/loss if Turtle’s price after one year is $40? (d) 3 If the maintenance margin is 25 percent, to what price can Turtle Industries fall before Jackie receives a margin call? USE THE
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• Financial system functions and goals • Types of assets, physical, financial, … • Debt, money market, notes, bond, government debt, sovereign debt • Types of US government debt, mortgage backed securities • Equities, common, preferred, warrants • Pooled investment securities, nav, open-end, closed-end, etf, trust depositories, hedge funds • Currencies, contracts, settlement, forward contracts, futures • Financial intermediaries • Primary market, secondary
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CHAPTER 11 Efficient Markets and Behavioral Finance Answers to Problem Sets 1. c 2. Weak, semistrong, strong, strong, weak. 3. a. False b. False c. True d. False e. False f. True 4. a. False - In what kind of markets do financing decisions occur? Investment Decisions occur where? b. False - c. True – what information do stocks not reflect? d. False- returns are the same for what kind of
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Indian Financial Code Summary The Indian financial system is suffering from the problems of lack of financial inclusion, growth of unregulated shadow market, slow pace of innovation and the challenges of financial integration. It is felt that the present code of the financial sector need to be reviewed and altered, while keeping in mind the present needs of the economy. This is because most of the laws are very old, there are overlaps and inconsistencies, and there is lack of clarity in terms of
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Nominal interest rate-the growth rate of your money. Real interest rate- the growth rate of your purchasing power. the real rate of interest is the nominal rate reduced by the loss of purchasing power resulting from inflation. the approximation rule overstates .The approximation rule is more exact for small inflation rates and is perfectly exact for continuously compounded rates. rr=rn-i ;rr=(rn-i)/1+i; conventional certificates of deposit offer a fuaranteed nominal rate of interest; Because future
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the announcement. But simply irrational bull traders may cause the price rise. Arbitrageur shorts deletions (buy additions) on announcement and holds the position until one day prior to the change date and settles it as close as possible to this day market close. Also, he can wait
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Stock Market and Stock Valuation in Ethiopia Context A capital market is a market for debt or equity securities and other financial instruments, where companies, municipalities and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on the money market. Primary market in Ethiopia has been flourished after the change of the economic assumption from socialist ideology to mixed
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economy of any country depends mostly on the establishment of sound, effective and efficient financial system in that country. A well-developed financial system plays an important role in accelerating economic growth by mobilizing savings and facilitating investment in an efficient manner (Mu, 2007). Financial market is composed of different markets- Money Market, Capital Market, Derivative Market etc. All the markets play an interactive role for the development of economy by formation of capital through
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