The efficient market hypothesis

 

250 words and minimum of 2 references each discussion.
1. What does the efficient market hypothesis (EMH) say about securities prices, their reaction to new information, and investor opportunities to profit? What is the behavioral finance challenge to this hypothesis?
Do you personally believe the EMH argument or the behaviorist argument?
Introduction of DQ4
The efficient market hypothesis is an important concept, not only in Finance but also in this course. The behavioral finance challenge to the EMH is also very interesting and an important part of the reaction of stock markets to new information, both good and bad. Just look at the reaction of the stock market to the Malaysian Airlines airliner shot down………..the markets dropped significantly that day on a global basis, but the following day, they bounced back dramatically, wiping out most of the previous day’s gains.
Efficient Market Hypothesis
There are many empirically-based research studies proving, to the extent possible, that the EMH is real, and the market (stock market) efficiently reacts to new information, both good and bad, almost instantly when the information is released, or slowly over time, as the market ‘impounds’ the value of the information received into the stock prices. I am looking forward to your DQ postings related to the EMH……………do a Google search on the EMH, and you will be inundated with information on this subject.

2. Financial executives insist that there should be no separation between an individual’s personal ethics and his or her business ethics. “It’s a jungle out there” and “business is business” should not be excuses for engaging in unethical behavior. Many firms have ethics codes which are based on economically rational concepts such as integrity and trustworthiness, which guide the decision maker in attempting to increase shareholder wealth. Of course, some employees sometimes choose to not comply with their firm’s ethics code.
How do ethics codes apply to project selection and capital budgeting? What are the potential risks to a company of unethical behaviors by employees? What are potential risks to the public and to stakeholders? Please explain how Saint Leo’s core value of integrity is reflected in your answer.
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3. Briefly describe the agency problem that exists between owners and lenders. How do lenders cause firms to incur agency costs to resolve this problem?
Introduction to DQ6
This DQ goes all the way back from some of the initial parts of this course to the Contents section of M1.

To get us going, lenders are not involved in the day-to-day operations and business decisions made by the owners in running their businesses. Also, owners may not be making decisions, both short- and long-term, which are in the best interest of their lender(s) or that might affect a lender’s decision with regard to lending money to a business (or its owners). Hence, the agency problem exists in this type of relationship.

Sample Solution

The efficient market hypothesis (EMH), alternatively known as the efficient market theory, is a hypothesis that states that share prices reflect all information and consistent alpha generations is impossible. According to the EMH, stocks always trade at their fair value on exchanges, making it impossible for investors to purchase undervalued stocks or sell stocks for inflated prices. Therefore, it should be impossible to outperform the overall market through expert stock selection or market timing, and the only way an investor can obtain higher returns is by purchasing riskier investments. The efficient market hypothesis states that share prices reflect all information. The EMH hypothesizes that stocks trade at their fair market value on exchanges. Proponents of EMH posit that investors benefit from investing in a low-cost, passive portfolio.

to recognize potential antimutagens and anticarcinogens giving open doors to the advancement of new medications to be utilized in the avoidance and treatment of neoplasies (Gebhart, 1992). Among the bioassays to evaluate DNA harm in mammalian cells in vivo, the chromosomal variation test is a powerful transient measure on the grounds that the occurance of the chromosomal deviations is one of the main natural outcome of openness of an organic entity to the genotoxic specialist. In vivo mammalian chromosomal distortion test has been effectively utilized for the identification of underlying variations prompted by the test substance in the bone marrow cells of creatures, typically rodents (Preston et al., 1987; Amer et al., 2002; Patlolla and Tchounwou, 2005). The benefits of the CA measure are connected with the phone by cell approach, a precise distinguishing proof of all the different chromosome transformation types, a potential co-discovery of mitotic lists and the semi robotized scoring by picture examination.

In late many years, upgrades in disease treatment have emphatically expanded the endurance rates among patients (UNSCEAR, 2000). However, the therapies like radiotherapy and chemotherapy are possibly genotoxic and mutagenic which can prompt the improvement of optional, therapy related conditions, including further tumors, as well as incline survivors toward different non-harmful illnesses that can frequently appear in the posterity (Glades et al., 2009). Present chemotherapy disease medicines have ended up being insufficient because of their poisonousness as well as for the cells creating opposition (Mc Whirter et al., 1996). Concentrates on carried on mice have likewise demonstrated the way that openness to anticancer medications can result in transgenerational genomic shakiness (Glen and Dubrova, 2012). Chemotherapy malignant growth treatment cases include perpetual use of antineoplastic specialists which kill neoplastic tissue as they are poisonous to quickly multiplying cells. Anyway all the while, they can harm ordinary multiplying cells too. This brings down their remedial record. In this manner long haul utilization of these antineoplastic specialists has turned into a subject of expanding concern (Arif et al., 2009).

In excess of 100 chemotherapy drugs are utilized in disease treatment, either alone or in blend with different medications or medicines. One such medication is Cyclophosphamide. Cyclophosphamide (CPA) which has a place with the class of oxazaphosphorines is an alkylating specialist. It had been recorded as one of the best chemotherapy drugs on the World Wellbeing Associations Rundown of Fundamental Meds. Cyclophosphamide has stamped immunosuppressant properties against both humoral and cell resistance due to which it has been widely used to treat various youth and grown-up malignancies (Thomson et al., 2002; Colvin, 1999; Triphaty et al., 2008) including bosom disease, lymphomas and leukemias, retinoblastoma, little cell cellular breakdown in the lungs, ovarian malignant growth, sarcomas and numerous myeloma (Fleming, 1997), since its underlying amalgamation in 1958. In any case, throughout the time its utilization has been declining a result of it making unfriendly hereditary impacts. The synthetic is initiated by t

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