Financial Markets Efficiency Essay Example | Topics and Well Written Essays - 1000 words

Financial Markets Efficiency - Essay Example Therefore, this form suggests that if everyone is aware of the price records, it is of no value. However, many financial analysts acquire profits by evaluating pas prices using technical analysis including pointing price policy or moving average technique, which according to this form has no value (Horne, 1990). Semi-strong form of market efficiency says, â€Å"Current prices have influence of all the information that is publicly available† (Williams, 2005). All the information takes into account the annual reports of the company that is â€Å"balance sheet and income statements showing the status of assets and liabilities of the company and telling about the revenues, expenses, and income of the company† (Fleming, 2004). It also encounters the payment of dividends, announcement of merger plans, upcoming macroeconomics expectations pertinent to inflation and unemployment (Fleming, 2004). It needs not only to be financial but every aspect that is responsible for adding o r subtracting value to the company. It can also be about the behavior of management with employees, the competence of research and development department, quality of the products and perception about the company in public’s mind. ... One needs to make a deep research to gather all the information, which is helpful in determining the current prices and getting profitable returns. The strong form of market efficiency does not only have impacts of public information but it also opts for information inside the company that is private information. Strong form is different from semi-strong form in a way that it does not want anyone to acquire profits even when public is not aware of the trading information at that time (Bollen & Inder, 2002). In simple words, it means that even the management and other important organizers of the company that is insiders should not be able to acquire profits on company’s shares. As insiders have knowledge about profitable shares, so they should not acquire these shares after few minutes later they make the decision. Additionally, the members of R & D department should not get profits on information they discovered half an hour ago. The objective of strong form of market efficien cy is that markets should possess abilities of anticipating in an impartial manner. However, this form of efficiency is very difficult to achieve as greed for money and other monetary rewards can persuade ones inner light and convert it into flesh. The question arises that why is there a need of efficient market. A market has to be efficient otherwise; investor’s money would go nowhere. An efficient market is one where all the information influences the prices of shares. Market has to be â€Å"large and all the information should be available to investors regarding a company’s financial conditions† (Bollen & Inder, 2002). In this kind of market, transaction costs should be less than the opportunity cost of investment. Opportunity cost is the

The Objective of Investment Essay Example | Topics and Well Written Essays - 1500 words

The Objective of Investment - Essay Example Investors now believe that real estate is an important investment opportunity and increasingly investors are investing in real estate (IPF, 2007). There are fluctuations not only in the asset or equity markets but even real estate investment have their own fluctuations as well. So, it is important for investors to analyze the rise and fall in the market of real estate. Therefore considering the changes in the market, the report aims to understand how the commercial property business operates as an investment and analyze the internal and external factor that influence the prices of properties. The main the purpose of the report is to understand how to maximize income on properties through purchasing the right product at the right time and how the capital value is influenced by that. The second part of the statement  will identify how to maximize the revenue in term of capital value and income revenue through ‘ProActive‘ Management, it will provide further knowledge towar ds the way management overall affect or improve the value of a property. Investment in commercial properties is defined as buying and purchasing of commercial properties with the objective of earning returns or buying commercial properties for the purpose of renting it. Adair et. al (2009) have published a report in which the properties of United Kingdom has been analyzed and from the analysis, it has been found that the value of the commercial properties in the  UK accounts to  £762 billion. However, the value of the residential properties is equal to  £3,400 billion. From the  £762 billion invested in the commercial properties, it has been found that almost 90% of the investors or owners of the properties are using their properties with the aim of achieving returns by giving their properties for rent to the tenants.