Report on Market Efficiency and security pricing

        Market efficiency alludes to the degree which is required by the market prices reflect the all variables related to the information data. The investors are tending to buy the index funds who are agree with this theory for tracking the performance of the overall market. This theory is also referred as the supporters of the passive portfolio management. For the portfolio manger the concepts of the market efficiency is very important. This concepts is derived from the EMH (Efficient market hypothesis). It is suggested that all the information of the security can be reflected by the price of the security.

        This paper explains the concepts of the market efficiency and security pricing in context of the Al Jazeera Services which is the register company of Muscat on the security exchange. The paper proposes the importance of the market efficiency by using the analysis and hypotheses for the Al Jazeera Services. The rerated articles and research will be analyzed in this paper in effective manners in the context of the Al Jazeera Services (Msm Gov Om, 2019).

Conceptualization and its importance and analysis of EMH

        The concepts of the market efficiency is most important because it has direct relation with the company and investors. Because in an efficient markets of Muscat no investor has access for any particular information can be used to making an extra profit. The market cannot be beat if it will be efficient. In 1970, the concept of the EMH has (efficient market hypothesis) has been proposed by the Eugene Fama.

         The importance of the market efficiency can be explained as, if the markets are perfectly efficient than the portfolio managers cannot pursue for the investment strategies. The active investment strategies are considered as underperform in the additional transactions cost and fee than the passive strategies. The important facts of the market efficiency for Al Jazeera Services is if eth markets are efficient than the security prices would not be affected due to that information which anticipated by the investors.  The fully unpredicted information by the investor has great impact on the price. As the information which is not anticipated by the Al Jazeera Services  has impact on the price. Moreover the Conceptualization of the market efficacy and EMH can be explained under various headings which are given n below. These all points proposes the effective information for explaining the concept and importance of the Market efficiency along with its various types (Maskay, 2007).

Capital market and its different efficiencies

            In any economy there are two major types of the financial markets which are money markets and capital markets. The term capital markets are referred as the market which is deals with the financial instruments and commodities which are considered s the long term securities. The capital markets has maturity of more than one year.  According to (Prabhakaran, 2017)the capital market is considered as the basic piece of money which is related to the framework.  It assumed as the important factor for the development of the monetary funds of the nation by observing the enormous development (Prabhakaran, 2017).  

There are four types of the capital market efficiency has been usually identified which are;

Operational efficiencies: according to this for sales and purchase of the securities the investors doesn’t be delayed and the costs of the transactions are low.

Information efficiencies of Market

 It is refer as the related information is available at low cost in wide range for all of the investors.

Pricing efficiencies of Market

             The ability of the capital market can be used to process the information accurately and quickly and it cab used as the consequences of the informational and operational efficiency.

 Allocation efficiencies of Market Efficiency and security pricing

It means the funds can be allocate for their most productive use their capital markets. It can arises as the result of the pricing efficiency.

Informational efficiencies of Market Efficiency and security pricing

There are three major forms of information efficiencies which explained here in effective manners. There are three major of the market efficiencies which are weak, semi strong and strong form the market efficiency. 

Weak efficiency of Market Efficiency and security pricing

        The weak efficiency is considered as the first form of the market efficiency. According to this term the stock price is considered as the reflection of historical data and relevance.  It includes financial statements, accounting data and other information which is publically available. For producing the prices of the stock exchange such type of the information is considered as the immaterial (Arvind Kumar, 2013).

Semi-strong of Market Efficiency and security pricing

        It is stated by the semi-strong form of market efficiency which is the second form of the market efficiency that all the publically available information can be reflected by the current stock exchange.  The past information includes in it as well.  The semi strong form is known as the weak form of the efficiency as well.

Strong form of market efficiency of Market Efficiency and security pricing

        In the case of the strong form of market efficiency the stock price are includes as the all of the information which available related to the stock either its private and public information. The traders of the insider information cannot avail the advantage if the market will be strongly efficient and they cannot make the abnormal profit.

Assumptions and implication of EMH on Al Jazeera Services

There are the following implications of the efficient market hypothesis on Al Jazeera Services;

The positive risk adjusted returns can be active by using the “technical analysis” in ten case of the weak form of efficiency.  In this case the volume and past prices have not predictive ports for providing the future direction for the security prices.

In the case of the Semi strong form of EMH the positive risk adjusted returns on average dose not earn by the fundamental analysis.

The strong form of the EMF can be implies as the abnormal profits cannot be earn even the person used insider information. The strong form efficiency must hold in all markets because it is considered as the best way to protecting the information.

Limitations of Market Efficiency and security pricing  

            There are the various limitations which are discussed in this research and these all limitations must be understood according the economic and political context of the Muscat. The paper has analyzed on one company of the Oman named as Al Jazeera Services.  The measurement errors are also involved in this study. The efforts has made to be understanding the concepts of the market efficiencies in good ways by using the convenient research study as evidence.  It is recommended for the future research that the more research studies can be consulted as evidence from the other companies of the Oman. Moreover, separate studies can be assumed for the services and products.

Conclusion on Market Efficiency and security pricing

        It is concluded that the markets efficiency can refers the degree and level which is used by market prices for reflecting the all of the variable which are used to provides the information of the stock of securities. By using the theory of the EMH the investors can be tend towards the buying of the index funds. It has been concluded that the term capital markets are referred as the market which is deals with the financial instruments and commodities which are considered as the long term securities. Four types of the efficiencies are discussed in this paper while one of them as informational efficiency has explained in well manner.