Advanced Global Financial Management.

Running head: REPORT 0
ADVANCED GLOBAL FINANCIAL MANAGEMENT
JANUARY 10, 2020
STUDENT DETAILS:

REPORT 1
Contents
Introduction –................................................................................................................. 2
Literature review -............................................................................................................ 3
Application by Corporate Managers-..................................................................................... 6
Conclusion..................................................................................................................... 8
References................................................................................................................... 10

REPORT 2
Introduction –
The Efficient Market Hypothesis is known as investment theory. In this theory, prices of
shares reflect the available information. The EMH is considered as the hypothesis in financial
economic, which represents that asset prices reflect all the existing data. The direct implication
of EMH is that this is not possible to "beat marketplace" constantly based on risk adjustment
since the price of market must only make reaction on new data. The procedural or fundamental
evaluation cannot make risk adjusted excess return or alpha consistently. Only insider data can
be resulted into oversized risk adjusted return. According to theory of EMH, the stock is traded
at fair value on stock’s exchange. It makes impracticable for investor to either purchase
undervalued stock or sell stocks at overstated prices.
There are three stages of EMH. The three levels of efficient market hypothesis are semi-
strong form efficiency, strong efficiency, as well as weak efficiency. It is assumed by the weak
efficiency that current price of stock reflects all presented data. This previous price’s
performance has no relation with the forthcoming. In different terms, it is stated by hypothesis
that it is impossible to conduct technical evaluation to get exceptional return. Supporters of weak
efficiency theory suppose that if fundamental evaluation is utilised, then the overvalued stocks as
well as undervalued stocks can be determined. In this way, the investor can evaluate the financial
statement of company to enhance the possibilities of making higher profit more than market
average profit. Additionally, the strong efficiency of the efficient market hypothesis explains that
private along communal data is incorporated in current prices of stock. It can say that strong
efficiency form of EMH essentially presumes the perfect marketplace. In this way, it can be
reasonable in case of the insider trading dealings. The supporters of this level of the EMH theory
state that the investors cannot make return on investment that exceed normal return of

REPORT 3
marketplace, regardless of the data retrieved or research made. In addition, it is stated by semi-
strong efficiency that price of stocks has factored in all current public data. As per the semi-
strong efficiency, this is not possible to utilise fundamental evaluation to select stock that would
beat the return of market. In the following parts, meaning of Efficient Market Hypothesis,
reasons of providing or not providing proper description of asset pricing in relation to debt and
equity is discussed and examined. This report also discusses the features of EMH.
(Urquhart & McGroarty, 2016)
Literature review -
The financial econometric volatility is greatly silent on a connection between asset return
volatility as well as the fundamental underlying factors. In its place, one typically proceed is
decreased form the projecting volatility but not projecting the effect of essential macroeconomic
development specifically, the connection between fundamental volatility and asset market
volatility remain greatly unstudied. The financial market including stock market attracts the