Is market efficient testing of Hong Kong stock market Essay

Is market efficient testing of Hong Kong stock market - Essay Example Several tests could be used to test for market efficiency. The most common tests are for market anomalies such as the January, Day-of-the-Week, and Size Effects. Another is to prove that any of the assumptions of EMH is not true; for example, that there is a way of predicting stock prices so that those who are able to do so can earn above normal market returns. Practitioners of finance and economics who have studied stock market behaviour have proposed several hypotheses, one of which is the so-called Overreaction Hypothesis (ORH). ORH originated from the field of applied psychology and is a statement of behavioural prediction that people tend to overreact to dramatic news and events, regardless of whether these events are positive or negative. On the other side and related to this hypothesis is its opposite: underreaction, a phenomenon that can also be considered. ORH provides a way of making decisions to buy and sell stocks, because if it is true, then some investors can earn above market returns by buying underperforming stocks and selling overperforming stocks, taking advantage of over- or under-reaction of other investors. The Hongkong economy has been identified as the one with the freest and, in the absence of artificial market barriers that cause inefficiency, therefore the most efficient financial markets, as it was given the highest Index of Economic Freedom1 (Heritage, 2006). This paper attempts to prove this by investigating whether the ORH phenomena exist in the Hongkong Stock Exchange (HKSE). 3. Investigate presence of ORH in HKSE for the period 1 April 1997 to 31 March 2007 using the methodology of Fung (1999) which is similar to DeBondt and Thaler (1985) but using the geometric mean, instead of the arithmetic mean, to reduce error caused by bid-ask spread as pointed out by Conrad and Kaul (1993). Fama (1970) popularised the Efficient Markets Hypothesis (EMH) which states that stock prices reflect all available

Greek civilization Assignment Example | Topics and Well Written Essays - 500 words

Greek civilization - Assignment Example This quote demystifies knowledge and education (Plato, 31). He argues for discernment and states that only sober individuals and states are capable of making sound decisions and laws; and this cannot be done without the training and knowledge of important virtues such as courage, discernment, temperance among others. Plato gives importance to education. The author of this quote is Antigone when she was defending her brother against the state law (Takemura, 5). This quote means that Antigone was not intimidated by the law of the state. She gives too much significance to the Natural law that she went against the law of the state to bury her brother. The writer of this quote is one member from the Athenian delegation. He was justifying the Athenian authority over the Melians who refused to submit to the Athenians’ authority (Greene, 164). This quote implies that the Athenians were so autocratic and powerful that they believed since they knew their gods, their actions to rule over the Mediterranean Sea were justified because they derive the laws from the gods. According Engel (91), this quote is said by Plato who was having a conversation with Meletus, his friend. It implies that Plato, who is Athenian, did not believe in any god. However, he denies it in the quote and claims that he believes in a god. The author of this quote is Thucydides who was a historian of ancient Greece. He was analyzing the Peloponnesian War between Athens and Sparta (Allen). His quote implies that his work was lengthy and the best that he could write not just like a mere essay but had meaning. He did not write it to be appreciated but his writing would be used in a literary manner. Athenians said this quote during the time of Peloponnesian War (Doyle, 61). This quote displays their confidence and power and the fact that they have dominated the Mediterranean Sea for long. It shows that Athenians were very proud to give in their power and