Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Efficient capital markets and behavioral challenges

14/10/2021 Client: muhammad11 Deadline: 2 Day

Capital Market Efficiency Paper

Capital Market Efficiency Paper

Capital Market Efficiency Paper

The purpose of the following paper is to explain what it means to have an efficient capital market. The author demonstrates an understanding of the various levels of market efficiency; this includes how behavioral finance can hinder reaching market transparency. There are several areas of the market discussed in this paper including behavioral challenges, market efficiency, corporate finance, and an opinion on real estate market being an efficient capital market (University of Phoenix, 2017).

Behavioral Challenges in Achieving Efficiency

There are three conditions concerning behavioral financial; the three conditions are known as rationality, independent deviation from rationality, and arbitrage (Ross, Westerfield, Jaffe, & Jordan 2016). All three conditions play their role in the behavioral changes in achieving efficiency. Each of these three conditions is based on human error, reasoning, and confidence levels. A person can be irrational when investing in the stock market, which can lead to overconfidence and regret regarding investments. One may also make irrational decisions based on familiarity relating certain stocks on the market. One could become repetitive with his or her stock options due to having inadequate information because he or she might invest using information gained from past events. Also, one could be too conservative when investing in the market and miss opportunities to invest in a new stock with the potential to earn millions or billions of dollars.

Forms of Market Efficiency

There are three form of market efficiency known as the weak-form, the semi-strong form, and the strong-form (Ross, Westerfield, Jaffe, & Jordan 2016).Concerning weak-form efficiency, if one analyzes the prices of past stocks, he or she will not be able to predict the future prices; they are completely random. According to Ross, Westerfield, Jaffe, & Jordan (2016), “The semi-strong form of the efficient market hypothesis implies that prices should reflect all publicly available information”. Concerning the strong-form efficiency, all figures in a market, both public and private, are allocated for in a stock’s price. Believers of the strong-form efficiency trust that not even insider trading can give an investor a lead; this level of effectiveness suggests that profits above normal returns cannot be gained (“Investopedia, LLC.,” 2017).

Implications to Corporate Finance

The market value of an organization should disclose the present value of the company’santicipatedfuture net cash flow if the capital markets were completely efficient; this has some crucial significanceconcerning corporate finance. Myers (1974) presented excellent advice regarding corporate finance:

1. Executives must make the most of the current market value of an organization.

1. Security returns are vital measures of a company’sfinancial performance.

1. No advantagesareaccumulated by manipulating EPS (earnings per share).

1. Accurate calculation of future payoffs indicates new shares of stocks being issuedat market price (Myers, 1974).

Real Estate Market

The real estate market would not be considered an efficient capital market; the capital market is a part of the financial structure concerned with raising capital by dealing with bonds,shares, and other long-term investments. The market for housing is not associated with the stock market (Ross, Westerfield, Jaffe, & Jordan 2016); one cannot buy stock in real estate, they can only buy properties.

Conclusion

The capital market is full of theories and a structure that contains many levels one must gain an understanding to so he or she can be successful in the market. The capital market structure must not be taken lightly, and one must educate his or herself before making any investment in the market. The preceding paper covered some points regarding the structure of the capital market, but there is always more to be learned to gain a true understanding of the market.

References

Investopedia, LLC. (2017). Retrieved from

http://www.investopedia.com/terms/s/strongform.asp

Myers, S. (1974). Interactions of Corporate Financing and Investment Decisions-Implications for

Capital Budgeting. The Journal of Finance, 29(1), 1-25. doi:10.2307/2978211

Ross, S., Westerfield, R., Jaffe, J., & Jordan, B. (2016). Corporate Finance (11th). New York,

NY: McGraw-Hill.

University of Phoenix. (2017). Capital Market Efficiency Paper. Retrieved from University of

Phoenix, FIN/571 – Corporate Finance website.

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Assignment Solver
Ideas & Innovations
Assignment Helper
Professional Coursework Help
High Quality Assignments
Top Class Engineers
Writer Writer Name Offer Chat
Assignment Solver

ONLINE

Assignment Solver

I have written research reports, assignments, thesis, research proposals, and dissertations for different level students and on different subjects.

$36 Chat With Writer
Ideas & Innovations

ONLINE

Ideas & Innovations

I have written research reports, assignments, thesis, research proposals, and dissertations for different level students and on different subjects.

$16 Chat With Writer
Assignment Helper

ONLINE

Assignment Helper

I am an academic and research writer with having an MBA degree in business and finance. I have written many business reports on several topics and am well aware of all academic referencing styles.

$18 Chat With Writer
Professional Coursework Help

ONLINE

Professional Coursework Help

I am a professional and experienced writer and I have written research reports, proposals, essays, thesis and dissertations on a variety of topics.

$27 Chat With Writer
High Quality Assignments

ONLINE

High Quality Assignments

I have done dissertations, thesis, reports related to these topics, and I cover all the CHAPTERS accordingly and provide proper updates on the project.

$50 Chat With Writer
Top Class Engineers

ONLINE

Top Class Engineers

I have read your project description carefully and you will get plagiarism free writing according to your requirements. Thank You

$21 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

When hester and dimmesdale meet in the woods - Statistics assignment examples - Chaucer canterbury tales excerpt - Australian catholic university grading scale - Week 15 nursing research - Innovative - Topik level 1 practice test - Ka value for benzoic acid - Why kkk burn the cross - Java craps game using methods - American government - Reading Reflection - Commanding heights episode 1 - Geos rescue coordination center - 159 cross road westbourne park - Cba mortgage discharge authority - Macdonald Triad - Explain how the flexpath program aligns with your career goals - Storytelling the handmaids tale - Hot topics in forensic psychology - Hamlet act 2 questions and answers - Social psychology 9th edition aronson wilson & akert pdf - Local Invasive Species - Mr megabucks dna worksheet answer key - What happened to the gracchus brothers - Eliminate reduce raise create grid - Steve wright non stop oldies - Beowulf epic hero traits worksheet answers - What does thane of cawdor mean - Food for the ancestors video questions - Cessna grand caravan operating costs - Abingdon lawn tennis club - Lazy deletion binary search tree - The birman cat club - Unit 9 Final - Nursing theory org theories and models - Bohol chronicle breaking news - Shell tellus s2 vx 46 msds - Ieee research papers on iot 2017 - What is the domain of a rational expression - Is the giant panda a herbivore carnivore or omnivore - Wedjat eye amulet meaning - Cooling load temperature difference table - 3 phase balanced system - Thinking for yourself 9th edition answers - Microwave waveguides and components - Iso 9001 2015 forum - What are the functions of management? - How to date a browngirl junot diaz - Practical Connection Assignment (Global Market and Blockchain Technology) - LAUDIUM ABORTION CLINIC +27717852514 ABORTION PILLS FOR SALE IN PRETORIA, ATTERIDGEVILE, SUNNYSIDE, ARCADIA, - Sentence starters for essays - Fun home chapter 1 pdf - Best akt question bank - Elena is attending mandatory therapy sessions - Whats size is a1 - Discussion: Cognitive Behavioral Therapy: Group Settings Versus Family Settings - Na hoku bird of paradise - Assalamu alaikum wa rahmatullahi - Gilliam autism rating scale score interpretation - Flinder street station renovation - Harley cannard net worth - Carl rogers theory of personality ppt - Paul westwood forensic document services - Principles of management midterm exam - Maya angelou quotes christmas lights - Morgans funeral home princeton ky - Nursing - The congruence between verbal and nonverbal communication helps to ensure that: - Econ 101 offline homework 2 - Political Issue - Daphnia heart rate temperature lab report - Nouns and pronouns quiz - Thesis statement for the chimney sweeper - Health Org Paper 3 - Www kirkleessafeguardingchildren co uk log in - Yellow days harmless melodies zip - W4 response - Incredible Jacket - Yves rocher los angeles - Bote cote epoxy e glue - Blood test whiston hospital - Biology year 11 syllabus - Highly stretchable and tough hydrogels - Leadership Behaviors - Lamarck vs darwin giraffe - How to unlock macbook pro 4 digit pin - Anointing of the sick symbol - Ustedes buscan el hotel. - Hp laserjet cp1525nw driver for mac - How to read literature like a professor chapter 24 examples - Dwight grabs jim's junk bloopers - As nzs 3003 2003 - Khan academy spss - Week 3 NURS 340 assignment - Size of golf ball in inches - Westjet case study corporate culture - Acme fireworks - Week4 - 1 chlorobutane sn1 or sn2