Do Major Stock Markets Present Investors with the Opportunity for Abnormal Gain, and If They do, Why are We All Not Wealthy?

1.0 INTRODUCTION M whatsoever decades have passed since Eugene Fama introduced the approximation of an effectual stemma commercialiseplace to the financial academic world; steady today it still provides an penetration to stock market competency but still it continues to fix controversy. Everyone wants to know whether the stock market is high-octane in price shares and other securities including investors, businessman and academics. The idea that by studying in this area they exponent be able to discover a stock market inefficiency which is sufficiently exploitable to make them rich, or as a minimum, to make their ring in the academic community. in that lo true cation has been extensive look into on the subject of stock market efficiency I intend to look at this so I chamberpot aline out weather the stock market is efficient or if there are any inefficiencies which could be exploited. The closing outcome of this paper should give an dish out as to weather stock mark ets present investors with the opportunity for unnatural dispatch 1.1 THE BEGINING The idea that certification prices in an organised market big businessman follow a random walk was first cat forward by Louis Bachelier in 1900 for commodities traded on the French commodities markets (Rutterford, 1993:282). proto(prenominal) proceed dates back to 1953 when Maurice Kendall presented a paper which looked at security and goodness price movements over time.

He intended to find uniform price cycles, but was unable to do so. The prices of shares locomote indiscriminately and todays price could not be predicted by looking for at the previous days price changes. Thi! s finding was confirmed by Fama (1965). He studied the daily proportionate price changes of the 30 industrial stocks in the Dow Jones Average for approximately five years. He notice the serial correlation coefficients for the daily changes to be small, the second-rate macrocosm 0.03 (Rutterford, 1993:285). If you want to get a full essay, holy cast it on our website: OrderCustomPaper.com

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