Hypothesis Testing and Essay
26 Pages9312 Words28 Views
Added on 2020-06-04
Hypothesis Testing and Essay
Added on 2020-06-04
ShareRelated Documents
Hypothesis testing andessay
TABLE OF CONTENTSPART A...........................................................................................................................................1INTRODUCTION...........................................................................................................................1(A) Efficient market hypothesis and Random Walk hypothesis................................................1INTERPRETATION OF PORTFOLIO OUTCOMES...................................................................2(B) Calculation of average monthly logarithmic return of portfolio A and B............................2c. Development of Hypothesis....................................................................................................7D Application of T test................................................................................................................7E. Discussion of findings............................................................................................................8F Comparison of results with previous research.........................................................................8REFERENCES................................................................................................................................9APPENDIX....................................................................................................................................10PART B..........................................................................................................................................16INTRODUCTION:........................................................................................................................16Study on Bayer- Monsanto merger deal:..................................................................................16CONCLUSION..............................................................................................................................21REFERENCES..............................................................................................................................23APPENDIX....................................................................................................................................24
PART AINTRODUCTIONAnalysing the changes and variation took place in the stock market of UK which bringsinformation among investors and stakeholder for the purpose of investment decisions. In thepresent report, there will be discussion based on various portfolio which will be compared withthe FTSE 100 index determining various outcomes through test like, regression and T-testanalysis. Further, this report will also reflect consist of recommendations based on Monsantoinvestors as per currency decisions and reforms undertaken by Bayer. Along with this, there willbe analysis on the portfolios of various industries which will be analysed as per examining theirefficiency in performing operations in the capital market. Thus, the efficient portfolio has beensuggested to the investors in making appropriate investment in organisations. (A) Efficient market hypothesis and Random Walk hypothesisEfficient Market Hypothesis:To identify the efficiency of market in context with share value which always reflect thefull information. This determination helps in analysing the efficiency of market on the basis ofintrinsic value of share which were being adjusted instantaneously and rationally to theannouncement of new information (Hamid & et.al., 2017). However, as per considering theframework of FAMA, which has categorised the s market in 3 segmentations such as:Weak form efficient: This is the market which represents all historical data as well asforecasted price movements in application of various statistical tools. It represents theextra returns made on portfolios (Emenike, 2017). It includes analysis relevant with rateof return, trading volumes, sequence of past prices etc.Semi-strong form efficient: This market is consisting of all information whichdetermines the current stock prices which reflects all historical information which arepublicly available such as annual financial disclosures, dividend pay outs, merger plansetc.Strong form efficient market: This is the market which has the strong data based onwhich it becomes tough to bit the market (Malhotra, Tandon & Tandon, 2015). Itcomprises of current stock value as well as historical data which are along with publiclyavailable information regarding operations.Random walk hypothesis:
This theory determines that the stock market prices of portfolio will as per the stockmarket price which evolve the changes in prices randomly which is unclear and cannot bepredicted (Beskos & et.al., 2015). Considering the opinion of various authors which insistvarious disputes in several areas such as:The ensured collective rational will not perform individually.There has been limits on the benefits based on allocative efficiency.Market rationality will never be implied through market efficiency (Sakai & Hukushima,2016).INTERPRETATION OF PORTFOLIO OUTCOMES(B) Calculation of average monthly logarithmic return of portfolio A and BAs per analysing the average monthly returns on the portfolios there will be analysis aslisted in the Appendix A with consideration of following justification such as:Appendix AInterpretation:Considering the above graph on which it can be said that there has been randomlyselected organisation in the portfolios which has reflected the outcomes. Looking through thedata set it can be said that there has been rise in the level of portfolio returns in the beginning asthe companies were performing well during that period. similarly, as per analysing the constant
outcomes determined after such peek return on which it can be said that firm has managed theirresources in that manner which brings it a constant return.Ascertaining the graphical determination on the basis of Portfolio B presentation it can besaid that there are various obstacles which in turn has the outcomes as rise in the level of returnspayable by the companies. Thus, it reflected the three phase such as rise in return, constantreturns for the long period as well as huge downfall. Thus, making investment in this portfoliowill bring a huge risk in connection with having the inapproprioate and inadequate managementof all the operations. the outcomes are unstable and which is not being recommended forplanning the investment in these firms. It can be said that efficiency of this portfolio is not up tothe mark as well as have better performance.
On the basis of above listed outcomes it can be said that the portfolios have appropriategrowth in the period of 2.6 years. However, as per comparing the outcomes on which Portfolio Ahas reflected the effective outcomes than Portfolio B. there has a negative fall in the outcomes ofPortfolio B which is not a favourable sign as per making the investing decisions in thosecompanies. Moreover, it will be suggested to the professionals of such organisation is that theymust have control over their resources and develop effective dividend policies which will beattractive and effective for them in bringing optimum returns.Descriptive analysis:
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Corporate Financial Management : Assignmentlg...
|19
|2973
|56
Hypothesis Testing and Essaylg...
|21
|3495
|39
Chapter 11 Efficient Market Hypothesislg...
|8
|3249
|35
Efficient Market Hypothesis Assignmentlg...
|6
|2261
|465
Portfolio Management: Analysis of Technical and Fundamental Methodslg...
|22
|3110
|350
Efficient Market Hypothesis and Behaviourial Financeslg...
|7
|1879
|483