Market Efficiency Essays (Examples)

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Market efficiency is the concept that markets have synthesized all available knowledge into the prices. Thus, the prices reflect that knowledge. By extension of this, there is little that an investor can do to "beat" the market -- that is to outperform market returns on a risk-adjusted basis. The theory of market efficiency is best encapsulated in the Efficient Market Hypothesis. This paper will explain market efficiency in detail and outline how understanding market efficiency can help investors to maximize shareholder wealth.
Heakal (2009) explains that Eugene Fama first proposed the efficient market hypothesis (EMH) in 1970. The EMH is based on the idea that "at any given time, prices fully reflect all available information on a particular stock and/or market" (Ibid). A perfectly efficient market will account for all publicly available information that can have an impact on the stock price. This information can be about the stock -- details….

Naturally, this improves profitability for private enterprises but simultaneously shrinks the American production and labor economies. This is the type of stifling of growth that has contributed significantly to the current state of recession gripping the United States.
Globalization makes as its underlying presumption the assertion that by reducing barriers to economic integration across international borders, the world community is creating a vehicle to a more equal distribution of wealth. hether the distribution is more equal or not, certainly the process of economic colonization which has occurred across the last decade and a half is creating wealth. That the largest concentration of this wealth is enjoyed by only the smallest fraction of trade and industry leaders is revealing of the concept of 'voluntary trade.' This principle is paired with a sociological tendency toward the enforcement of stringent private property rights, with the two mechanisms creating vast opportunities for parties in….

Market Efficiency
PAGES 6 WORDS 2059

Excess Stock eturns
The author of this report has been charged with doing a brief literature review and then answering two basic questions. The first question is whether the empirical evidence available leads to a predictability of stock returns using technical analysis. The second question asks the author to critically evaluate whether return predictability is a good indicator and test of market efficiency. While some people can get rich in the nastiest and most volatile economic climates, there is generally a correlation between how well the market tends to be and how well returns tend to be during the same time period, based on the totality of the evidence reviewed in this report.

Asness weighs in on the two questions to be answered in a fairly textbook way. Asness et al. (2013) asserts that there is a "value" effect whereby the long-term view of an investment is compared to its current value.….

Market Efficiency and Empirical Approaches to Test for it
A review and discussion of market efficiency

A financial market is efficient with respect to information item, if the new information has fully influenced the market prices. In an efficient market, when a new information is made available its impact is said to be instantaneous or rapid and unbiased to the financial assets' current market prices.

There are three different hypotheses that have been formulated to try and explain market prices, in respect to what kind of information is availed to the market. The weak version of efficient market hypothesis suggests that the changes in market prices are in respect to all the information that the public has had in the past. The semi-strong form of hypothesis suggests that the current prices in the financial market is a reflection of all the information that the public, and that the introduction of new information….

Market Efficient espect Set Information Impossible Makes Abnormal Profits
Market Efficient

In his work, Fama argued that given the massive use of resources by the brokerage firm to conduct studies on trends in the industry, the effects of changes in interest rates on corporate balance sheets and expectations of managers and/or political analysts of the companies should be able to systematically beat a generic portfolio with the same risk characteristics.

Since, according to Fama, professional in every situation, the analyst has a fifty percent chance of beating the market; although its specific capabilities did not exist he would beat a lot of the market. The analyst did "help" the market to be efficient if all the investors, in fact, would hold portfolios composed of stock indices, would open up significant opportunities for professional traders to take advantage of the situation. But the movement of traders to that "new market" would mean that the….


Specification of Thesis's Main Point:

Goldman (2009) surmises that today's economic crisis has changed many aspects of financial reporting, one of which is the calculation of the cost of capital.

Three Supporting Opinions/easons:

Utilizing much of his own personal, professional experience as well as other sources, Goldman's (2009) three supporting opinions all highlight the impact today's economic crisis has had. He quotes Marc Panucci, an SEC associate chief accountant, in his first supporting opinion. Panucci agrees with Goldman's theory that the turbulent economic environment of today requires changes to existing disclosures, in order to meet disclosure requirements. This is especially true when meeting disclosure requirements in liquidity, risks and uncertainties, and credit risks.

The Internal evenue Service is Goldman's (2009) second supporting source. Not known for their empathy, the IS has eased rules so that homeowner's facing tax liens can sell or refinance their homes. In fact, in some instances, "the IS is willing….

Market Model Changes
The medtech, or medical technology, industry is a large and intensely competitive industry that produces highly innovative medical devices for hospitals and other healthcare facilities in the effort to save lives and improve health for patients (Research, 2012). It is spread across different segments including, cardiology, oncology, neuro, orthopedic, and aesthetic devices. It relies largely on aging baby boomers, high unmet medical needs, and increased incidence of lifestyle diseases, including cardiovascular disease, diabetes, hypertension, and obesity.

The industry is being challenged by pricing concerns, hospital admissions and procedural volume, uncertainty concerning healthcare reform, Medicare reimbursement issues as agencies are looking for cost reduction measures, and regulatory overhang. There is a rise in patients deferring treatment in elective procedures. "One factor aligning economic and clinical forces: in the U.S., the number of medical practices owned by hospitals grew from 25% in 2005 to 50% in 2008" (practice, 2011). Where hospitals….

Market for Milk if More
PAGES 4 WORDS 1263

The total supply of milk might remain the same, because the remaining high-efficiency producers are likely to be able to earn profits at this level of output. In the long-run, however, lower prices are going to sustain the quantity of milk demanded at higher than equilibrium levels, and the profits available to producers at lower than equilibrium levels. Producers, in their efforts to control costs, are going to reach a point of diminishing returns on those efforts. The result of this is that the market for milk will eventually become so distorted by the price ceiling that the government is forced to raise the price ceiling in order to ensure that there are producers remaining in the market. The government will have created a situation where to simply maintain the milk market requires active management.
2. There are several factors that contribute to the price elasticity of demand. One factor….

Over the last few years, the government has exerted more control on the insurance industry by controlling premium rates meaning the industry has become less competitive on pricing. In addition to this, through Obamacare, the government has set requirements for healthcare insurers which have significantly reduced their medical loss ratio Dinan 396.
The second factor that affects the degree of competitiveness of the industry is the number of companies operating in the industry. This has been the major reason for the hundreds of mergers in the industry since this is the major driving factor for changes in market share. The last factor is government-provided health insurance. The government provides insurance plans which create significant competition for the private companies Vanness and olfe 101()

The productivity measures that can be developed are the number of health insurance consumers, average cost of providing medical cover and price of health insurance premiums. The number….


Then, a second major difference resides in the sources used to retrieve the necessary funds. The nonprofit organizations do indeed get the support of the federal budget in the meaning that they are often exempt from tax payment; but they have to raise the funds by themselves without any additional help or interference. They do this through the organization of various events, such as concerts, dinner parties or theatre plays, during which wealthy members of the community donate money to the causes promoted by the NPOs. In the case of governmental institutions however, the funds come directly from the state officials. The money is initially collected from the general public in the form of taxes, fines or other transfers to the state budget, and then redistributed to the state agencies.

A third difference also deals with the financial nature of the organizational activities, but is somewhat different from the previous one.….

The assumptions of industry structure and pricing are based on the market shares of the leading competitors in the motorcycle market including Harley-Davidson with 65% and Honda with 12.9%. There are over 40 different manufacturers of motorcycles globally who comprise the remaining 22% of the worldwide market (Murphy, 2008). Gaining distribution for a new motorcycle model will be challenging given the concentration level of competitors in the market. As motorcycles are considered discretionary purchases, they are influenced by the consumer sentiment index, the level of per capita disposable income, the downstream demand for motorcycle dealership and repair, and the available time consumers have for using them (Diamond, 2008). All of these factors are taken into account in the factoring of both the baseline motorcycle industry forecast and the hybrid motorcycle forecast as well.
Sales and Unit Forecasts

Using exponential smoothing and an average sale price of $9,100, the forecast for the….

Of course, this is a good thing for customers on short-term, but is negatively affects other companies on the market. This is because smaller competitors and especially those that intend to enter the market addressed by IBM find it at least difficult to provide product prices in accordance with those provided by IBM. These smaller companies do not have the ability of reducing their production or operating costs, which does not allow them to introduce competitive prices on the market. This way, they are clearly disfavored by IBM's position and market power.
In addition to this, in a field like it, it is imperative to make continuous investments into the research and development activity. This requires significant capital amounts from these companies. The investment levels that IBM reaches cannot be reached by many of these companies. This makes it difficult for these companies to keep up with IBM and its….

2009).
Market Share and Sales

As stated above, it is impossible to predict total market share in terms of a percentage or direct proportion. The growth in the demand for web development services vastly outstrips supply, and with a large part of the retail sector still untapped in terms of website sales it will be impossible for any small competitor to capture a major portion of market share (Urbach et al. 2009; Mohammed 2008). Sales will only be limited by the potential of the company to produce the products sold, however, meaning a substantial amount of revenue can be generated.

Ongoing Market Evaluation

Statistics and market trends are regularly calculated, compiled, and published by a variety of individuals and organizations, including the Canadian national government, which will allow for the continuous monitoring of relevant data and potential impacts on the market (Office of Consumer Affairs 2011). The company's planned move back to China….

Even public transportation is growing more expensive, given that cash-strapped states are raising fares.
SOT Analysis:

Strengths

Victory offers customizable bikes with great value and power, according to its promotional literature. I

eaknesses

Victory began as an "offshoot" of Polaris Industries, which is mainly known for marketing snowmobiles and ATVs. Amongst the target audience, particularly in the South and areas where snowmobiling is uncommon, it may have little brand recognition.

Opportunities

The economic downturn and demand for more fuel-efficient vehicles could be capitalized upon as a great opportunity for the company -- more individuals are likely to be seeking out motorcycles as a mode of transportation.

Threats

In a recent head-to-head of Harleys and Victories, one trade magazine said that Victory produced the superior model, but Harley had the better-known name: "It comes down to cooler character of the Harley vs. The better handling, more powerful Cross Country. I know which one I'm choosing," concluded the reviewer (Cherney,….

Market Equilibration Process for Computer Peripherals
That Experience High Level of Cyclicality

The demand for computer peripherals in general for the inkjet and low-end nonimpact printers specifically has continually proven to be highly inelastic, where price reductions are not as effective as a continual stream of new product innovations. Having completed internships with peripherals manufacturers, this observation became very clear as product management and marketing teams continually tested the market equilibration process with price reductions, bundling suppliers and extending the overall warranty period as well. When the law of demand is applied to computer peripherals in general and inkjet printers specifically, the inelasticity of these markets becomes more pronounced and the ancillary process workflows emerge as the primary differentiators.

Analysis of Market Equilibration Process for Computer Peripherals

In the absence of highly elastic product demand and exceptional product differentiation that leads to unitary or highly elastic demand curves for products, the supporting processes and….

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6 Pages
Essay

Economics

Market Efficiency Is the Concept That Markets

Words: 1627
Length: 6 Pages
Type: Essay

Market efficiency is the concept that markets have synthesized all available knowledge into the prices. Thus, the prices reflect that knowledge. By extension of this, there is little that…

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6 Pages
Essay

Economics

Market Efficiency Privatization and Productivity

Words: 1745
Length: 6 Pages
Type: Essay

Naturally, this improves profitability for private enterprises but simultaneously shrinks the American production and labor economies. This is the type of stifling of growth that has contributed significantly…

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6 Pages
Essay

Economics

Market Efficiency

Words: 2059
Length: 6 Pages
Type: Essay

Excess Stock eturns The author of this report has been charged with doing a brief literature review and then answering two basic questions. The first question is whether the empirical…

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10 Pages
Essay

Economics

Concepts of Market Efficiency and Empirical Approaches to Testing

Words: 3402
Length: 10 Pages
Type: Essay

Market Efficiency and Empirical Approaches to Test for it A review and discussion of market efficiency A financial market is efficient with respect to information item, if the new information…

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8 Pages
Essay

Economics

Market Efficient Respect Set Information Impossible Makes Abnormal Profits

Words: 2918
Length: 8 Pages
Type: Essay

Market Efficient espect Set Information Impossible Makes Abnormal Profits Market Efficient In his work, Fama argued that given the massive use of resources by the brokerage firm to conduct studies on…

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4 Pages
Essay

Economics

Market Turmoil May Require New

Words: 1192
Length: 4 Pages
Type: Essay

Specification of Thesis's Main Point: Goldman (2009) surmises that today's economic crisis has changed many aspects of financial reporting, one of which is the calculation of the cost of capital. Three…

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3 Pages
Essay

Healthcare

Market Model Changes the Medtech or Medical

Words: 865
Length: 3 Pages
Type: Essay

Market Model Changes The medtech, or medical technology, industry is a large and intensely competitive industry that produces highly innovative medical devices for hospitals and other healthcare facilities in the…

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4 Pages
Essay

Economics

Market for Milk if More

Words: 1263
Length: 4 Pages
Type: Essay

The total supply of milk might remain the same, because the remaining high-efficiency producers are likely to be able to earn profits at this level of output. In…

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4 Pages
Research Paper

Healthcare

Market Model Patterns of Change

Words: 1403
Length: 4 Pages
Type: Research Paper

Over the last few years, the government has exerted more control on the insurance industry by controlling premium rates meaning the industry has become less competitive on pricing.…

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15 Pages
Term Paper

Business - Management

Efficiency of Nonprofit vs Government

Words: 4548
Length: 15 Pages
Type: Term Paper

Then, a second major difference resides in the sources used to retrieve the necessary funds. The nonprofit organizations do indeed get the support of the federal budget in the…

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4 Pages
Essay

Transportation

Market Potential and Forecast Analysis

Words: 996
Length: 4 Pages
Type: Essay

The assumptions of industry structure and pricing are based on the market shares of the leading competitors in the motorcycle market including Harley-Davidson with 65% and Honda with…

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8 Pages
Essay

Business

Market Competition and Regulation the

Words: 2379
Length: 8 Pages
Type: Essay

Of course, this is a good thing for customers on short-term, but is negatively affects other companies on the market. This is because smaller competitors and especially those…

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3 Pages
Business Plan

Business

Market Analysis Mocfish Market Analysis

Words: 788
Length: 3 Pages
Type: Business Plan

2009). Market Share and Sales As stated above, it is impossible to predict total market share in terms of a percentage or direct proportion. The growth in the demand for…

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3 Pages
SWOT

Transportation

Market Summary Swot Analysis Victory Motorcycles

Words: 874
Length: 3 Pages
Type: SWOT

Even public transportation is growing more expensive, given that cash-strapped states are raising fares. SOT Analysis: Strengths Victory offers customizable bikes with great value and power, according to its promotional literature.…

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2 Pages
Essay

Business

Market Equilibration Process for Computer Peripherals That

Words: 639
Length: 2 Pages
Type: Essay

Market Equilibration Process for Computer Peripherals That Experience High Level of Cyclicality The demand for computer peripherals in general for the inkjet and low-end nonimpact printers specifically has continually proven to…

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