Question

1.is the stock market absolutely efficient? 2.if market is efficient, January Effect should not exist. Do...

1.is the stock market absolutely efficient? 2.if market is efficient, January Effect should not exist. Do you agree?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. No, the stock market is not absolutely efficient. Efficient market hypothesis assumes many things that may not hold good in the real world. For example, it assumes that all the investors behave rationally, which is not always true. Due to fear and greed, investors may not behave rationally, during which times value investors like Warren Buffett take great advantage.

2. Yes, I agree that, if the market were efficient, then the January Effect would not have existed. According to the January effect, stock prices increase because of the increase in buying activity. In an efficient market, the prices would reflect the fundamentals of the company and the prices would incorporate all the publicly available information.

Can you please upvote? Thank You :-)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If the stock market is semi-strong form efficient, which should be the effect of a previously...
If the stock market is semi-strong form efficient, which should be the effect of a previously unanticipated announcement that a technology firm has developed a new and unexpected product with a positive net present value, in the absence of any other announcements or market moves: Group of answer choices The firm's stock price increases gradually to a new level. The firm's stock price immediately overshoots, then decreases to the correct level. The firm's stock price increases immediately to a new...
A market in which insider trading do not exist is __________. Multiple Choice Systematically efficient. Completely...
A market in which insider trading do not exist is __________. Multiple Choice Systematically efficient. Completely efficient. Semi-strong from efficient. Weak form efficient. Strong form efficient.
What exactly does the efficient market hypothesis contend about prices in the stock market and the...
What exactly does the efficient market hypothesis contend about prices in the stock market and the ability for an individual investor to consistently beat the market? 2. What exactly is an asset bubble and what evidence does Thaler provide that a housing bubble was forming starting in 2000? 3. What does Thaler say that he would do if he were in charge of the Federal Reserve and spotted scenarios like Scottsdale and Las Vegas occurring in the market? 4. Does...
. If the stock market is efficient, in what type of mutual fund should you invest?
. If the stock market is efficient, in what type of mutual fund should you invest?
Is the predictability of stock returns evidence for market efficiency? Discuss. If markets were informationally efficient,...
Is the predictability of stock returns evidence for market efficiency? Discuss. If markets were informationally efficient, should we expect analysts to exist as a profession?
1. If stock prices should be based on future cash flows (i.e., dividends) why do investors...
1. If stock prices should be based on future cash flows (i.e., dividends) why do investors purchase stocks of companies that do not pay dividends? 2. There are some that say that U.S. firms concentrate too much on short-term profits and not enough on long-term profits. Do you agree? How does this conflict with the valuation of stock based on future cash flows. 3. Describe the Efficient Market Hypothesis. 4. Describe Weak efficiency Semi-strong efficiency Strong efficiency Which, if any,...
In an efficient market, a stock with a standard deviation of returns of 12% could have...
In an efficient market, a stock with a standard deviation of returns of 12% could have a higher expected return than a stock with a standard deviation of 10% because the beta for the higher standard deviation stock could be lower than the beta for the lower standard deviation stock. would you agree?
The Efficient Market Hypothesis implies that future stock price movements should be random and unpredictable. Why?
The Efficient Market Hypothesis implies that future stock price movements should be random and unpredictable. Why?
If the stock market is at least weak form efficient, then price changes should allow investors...
If the stock market is at least weak form efficient, then price changes should allow investors to earn abnormal returns should follow patterns should go up if the price went up the day before should be random
2.48 The “January effect.’’ Some people think that the behavior of the stock market in January...
2.48 The “January effect.’’ Some people think that the behavior of the stock market in January predicts its behavior for the rest of the year. Take the explana- tory variable x to be the percent change in a stock market index in January and the response variable y to be the change in the index for the entire year. We expect a positive correlation between x and y because the change during January contributes to the full year’s change. Calculation...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT