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Essay / Research Paper Abstract
This 5 page paper looks at the end turn of the month effect in the stock markets and looks to what behavioural reasons may be found to create this effect. The bibliography cites 6 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEendmon.rtf
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Unformatted sample text from the term paper:
United Kingdom, May 2003. To Use This Report Correctly, There are many theories postulated regarding the performance of the stock market
and patterns that are found within that performance. One of the more widely accepted patterns is that of the turn of the month effect. The effect has been observed over
a period of sixty five years in the United States where large stocks would be seen to show higher returns at the turn of the month, usually defined as the
last day of one month and the first three days of the following month (Hensel and Ziemba, 1996). This was true between 1929 and 1993 and it is stated that
"that the total return from the S&P 500 over this sixty-five year period was received mostly during the turn of the month". Ironically, it is also noted that where this
phenomenon occurs it is also one that is unlikely to be self fulfilling with the level of behavioural expectation playing a very limited role as the ability to create any
real benefit from this effect is counteracted with the transaction costs (Penman, 1987). The reasons behind this phenomena have been the subject of many studies, if it is not
a self fulfilling prophesy, then other reasons need to be sought out. Many of these reasons are likely, as with all other phenomena, to relate at least equally to behavioural
and psychological reasons as much as statistical analysis and logical investment techniques. The effect may be seen as relating to other behavioural patterns, not necessarily related to
the stock market. The first influence may be due to the monthly trends that are seen in society as a whole. It is at the month end that many bills
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