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Essay / Research Paper Abstract
This 6 page paper puts forward the hypothesis that the stock price performance on the Mumbai Stock Exchange is explained by the weak form of Efficient Market Hypothesis (EHM). The writer sets out to do this with a two stage process. Initially the random walk theory is eliminated with information from the Bombay Stock Exchange National Index (BSENI), and then the weak form of EMH is proven with analysis of performance that can only be proven with the use of historical data. The bibliography cites 8 sources.
Page Count:
6 pages (~225 words per page)
File: TS14_TEinfemh.rtf
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Unformatted sample text from the term paper:
its weak form on the BSE in its weak form we first have to define EMH and the weak form, and briefly define the alternatives that may be found so
that we may recognise them. EMH is a paradigm put forward by Fama (1970). In this description he outlines three forms, the weak form, the semi-strong form and the strong
form (Fama, 1970). The weak form of the model states that "the stock returns are serially un-correlated and have a constant mean" (Poshakwale, 1996). In other words where there is
a market prices are seen as reflecting in full the historical market prices information (Fama, 1970). For a market to be semi strong there is the use of all publicly
available information, in the last form the strong form there is the use of all the information, both public and private. If we
look more closely the weak form we will understand it in greater depth, and as such can test for its presence. The weak form of the hypothesis says that when
trying to find a stock where there is a bargain price the role of a technical analysis of the trends will not yield any benefit, as the price that the
stock is currently priced at will reflect the available information and has already been incorporated. In-depth discussion is not included as it is assumed that the student already has a
comprehensive understanding. In looking at this we also need to consider random walk theory, as it is diametrically opposed to EMH. This states
that stock market process will be random, and as such it is not possible to predict how a price will perform based on todays stock price (Poshakwale, 1996). Our null
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