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Essay / Research Paper Abstract
This 12 page paper looks at three different financial issues that are important for management to understand. The first issue is the assessment and concept of efficiency in capital market, looking at Efficient Market Hypothesis. The second issue considers potential sources of capital and the advantages and the disadvantages associated with each source. The last section considers the role and importance of dividends. The bibliography cites 15 sources.
Page Count:
12 pages (~225 words per page)
File: TS14_TEmarkeff.rtf
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Unformatted sample text from the term paper:
are a integral part of the economy proving investment opportunities and also indicating the strength of the markets and consumer and investor confidence. Where confidence drops there will be dips
in the market or section of the market. The shareholders in the firm will usually be investing with the aim of getting a good return, and the firm will be
valued on a range of criteria,. However, the way shares are valued has been the subject of much debate with theorists seeking to determine if there is way that a
bargain or under values share can be spotted. If markets are efficient then the way the shares are valued should reflect logical reasoning and expectations for the firms future performance.
An interesting approach is that of the efficient market hypothesis. Efficient Market Hypothesis is a theory that was developed for the most part
at the University of Chicago, the theory is both a stand alone theory as well as forming an integral part of more complex ideas, such as Modern Portfolio Theory (Freeman,
2001). Therefore, it can be argued there is some empirical proof that the theory has some value to investors. However, this does not mean that it is an accurate theory.
To assess this we need to look at the theory and how it can be justified and then consider if it is accurate and to help assess if the markets
are truly efficient. The basic hypothesis behind the theory is that it is not possible to beat market prices as the prices will already include the relevant market information
(Fama, 1965, 1991). The models states that, at any given point in time, the price of the stocks or securities, will reflect the information that is currently available about
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