Question 2
The efficient market hypothesis (EMH) maintains that all stocks are perfectly priced
according to their inherent investment properties, the knowledge of which all market
participants possess equally.
You are required:
a)
Discuss what are the characteristics of an efficient market
b)
Collect the movements in daily share prices of top 50 (fifty) largest companies in term
of capitalisation listed on S & P 500 (USA) over a 90 days’ period.
c)
Based on the data collected in b), you are to analyse and discuss
i)
whether all the selected stocks are perfectly priced according to their inherent
investment properties, the knowledge of which all market participants possess
equally.
ii)
to review carefully key academic literature and relevant published empirical
evidence on EMH relating to the chosen stock exchange market, and to carry out
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