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Strong form level of Efficiency
This level states that price reflects all the available public and private information (past, present and future information). If the hypothesis is correct, then, the mere publication of information that was previously confidential should not have impact on share prices. This implies that insider trading is impossible. It follows therefore, that in order to maximize shareholders’ wealth, managers should concentrate on maximizing the NPV of each investment. Tests that have been carried out on this level have concentrated on activities of fund managers and individual investors. If the markets have reached the strong form levels, then fund managers cannot consistently perform better than individual investors in the market.
Call-Put Parity P + S = C + E * [1/(1+i)] ^n where: P = the market price of the put S = the market price of the stock C = the market price of the call
Q. Calculation of Cost of Capital? Calculation of Cost of Capital: - Calculation of cost of capital includes: (A) Calculation of cost of specific sources of finance (B) C
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The production department in any firm is concerned with provision of production facilities, production cycle, skilled and unskilled labor, storage of finished goods, capacity utili
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Provide three examples of mutually exclusive projects. Mutually exclusive projects are projects which participate against each other for our selection. If a organization and fir
Drug companies are not forced to divulge all studies they performed to the FDA. Suppose a drug company knows that the drug has no effect and followed the strategy described in (b1)
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