investment-short answer questions

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WBUA-FF

Business Finance

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1. From the articles you have read and written on, do you feel that markets are truly efficient and in which form?

2. Explain the concept of behavioral finance. How does relate to market efficiency?

3. Explain the challenges of investment in foreign companies. Be sure to mention their economy, political climate and exchange rate.

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Explanation & Answer

Attached.

1
RUNNING HEAD: MARKET EFFICIENCY

MARKET ANALYSIS.
1. From the articles you have read and written on, do you feel that markets are truly
efficient and in which form?
Markets exhibit different market behavior and trends depending on many factors e.g. market
conditions, sate of the economy, political factors, exchange rates, interest rates, variability in the
price levels of products in the markets, geographical factors e.t.c. All these factors affect the
market trend which exhibits an uptrend, downtrend or stagnant trend.
There are 3 forms of market efficiency.


Strong form efficient market hypothesis- it states that all information in the markets,
public or private, is accounted for in a stock price. In addition, insider information cannot
be used to beat the market hence, investors cannot make abnormal returns.



Semi-strong form efficient market hypothesis- it states that all public information is
included in a stock price. Investors cannot use the technical or fundamental analysis to
beat the market.



Weak form efficient mar...


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