Event study for efficient market hypothesis ex dividend data Dissertation

Event study for efficient market hypothesis ex dividend data - Dissertation Example The intention of this study are efficient market hypothesis. The theory ‘efficient market’ was formulated by Eugene Fama in 1970. He described an efficient market as a market where at any point in time, actual prices of individual securities already reflect the effects of information based both on events that have already occurred and on events which, as of now, the market expects to take place in the future. The efficient market prices represent the intrinsic value of the securities. Researchers have developed this hypothesis to be known as the Efficient Market Hypothesis (EMH) which states that the market prices reflect all information known to the public. Market react to any new information available in the market immediately as reflected in stock prices rather than gradually adjust it. This theory is an important concept in the area of understanding equity markets and cost of equity capital. Another important concept in the area of equity markets is that of random wa lk hypothesis. According to this hypothesis, the anticipated price of an asset fluctuates randomly around its expected value. Both the efficient market and random walk hypothesis, it is a futile exercise to try and find overpriced and under-priced assets. This is because, in an efficient market, the assets in the stock market are already reflecting all the available information. There are no future predictions that can be made about how a market will behave. The price of any assets is already a reflection of the best estimates for the expected risk and return of the assets. The suggestion that all the information known about past, present and future events is reflected in the current market prices means that the financial analysts are snake oil salesmen. This is why the EMH is such a controversial hypothesis. However, in an inefficient market, investors can identify miss-priced assets. Identifying the same can enable an investor to achieve gains (Rutterford, 1993). Because of these reasons, these hypotheses provide a solid theoretical and predictive model about the operations of the financial markets and influence more people to invest in stock market (Will, 2006). Types of Market Efficiency There are three primary categorization of EMH given by Fama (1970) according to the type of information reflected in the stock price – 1. Weak-form efficiency - Share prices reflect all past information and thus, rules out the possibility of predicting future stock prices on the basis of past

War and Technology Essay Example | Topics and Well Written Essays - 1750 words

War and Technology - Essay Example During World War One, military officials realized the importance of having up to date weapons to win wars (Stewart 2001)2. During this period, armies used advanced weapons recognized as second generation warfare and realized that machinery and weapons are used to conquer and win battles and the only importance of military officials is limited to occupying the conquered areas. 1Harris, Brice F.  America, Technology and Strategic Culture: A Clausewitzian Assessment. London: Routledge, 2009. Internet resource. 2Neil, Stewart.  The Changing Nature of Warfare, 1700-1945. London: Hodder & Stoughton, 2001. Print. During this period armies even realized the importance of transportation as these vehicles were used to transport men and machinery from one end to another. These improvements in technology clearly defined that to gain victory in war; you have to be sound technologically at both the operative and the tactical bases. The belief of technological soundness being the determinant o victory of war was clearly visible in different wars such as the Cold War and Current Wars that take place every now and then. Body After WWII, major nations throughout the earth started developing the technological side of their defense, they started developing and acquiring new kinds of air shuttles, sea transport and weapon, new form of larger missiles and bombs and machinery that is used while nation’s army is fighting in the land (Melko 2001)3. The continuous up gradation of the technological side led to the development of military aircrafts and air transports which had higher degree of accuracy and speed, researchers even developed new forms of surveillance systems to gain higher degree of accuracy during the process of acquiring information, for this purpose GPS systems came into existence. These developments in technological advancements were recognized as 3GW (Third Generation Warfare), these developments were utilized during the period of WWII and during Gulf War th at took place between Iraq and US and later even in different attacks conducted on Iraq starting from 2003 till present date. These wars clearly exhibited that those countries that were able to accept and create technological advancements are the victorious ones. 3Mathew, Melko.  General War Among Great Powers in World History. Lewiston, N.Y: Edwin Mellen Press, 2001. Print. Advanced Technology in Operational Level While creating a strategy before going to war, both the tactical as well as the operational bases of the war are taken into consideration and special importance is given to the technological aspect of these two bases. According to Giulio Douhet, one of the best strategies implemented is the use of air power to destroy the opponent civil population’s willingness to fight (Douhet 2010)4. This strategy was implemented in different wars, for example: during the period of WWI, this strategy was implemented by the German strategists while attacking London and NATO forc es even used the same strategy while attacking Kosovo. This strategic move increases the accuracy at which the war targets are attacked, thus this strategy obtains the optimum result while keeping the collateral losses at the lower end. Advancement in technology has been accepted as morally correct as these advancements increases the probability of armies gaining the accurate intelligence about the legal targets that need to be