Essays on Efficient Market Hypothesis

Investment appraisal and efficient market hypothesis

PART A: Investment Appraisal

Determination of cash flows Calculation of NPV The NPV of the equipment is $298,352. The value is positive implying that the equipment is viable. Under the NPV criterion, a firm should accept an investment whose NPV is more than zero (Chandra, 2014). Therefore, Stream Stop Ltd. Torrent Flood Defences Plc should undertake the project.

Mistakes made within the original proposal

Appraisal technique: The Company made an error in the choice of the method of evaluating the investment. The return on investment uses the net profit in determining the worth of an investment (Röhrich, 2014). Investment analysis should be based ...

A market is efficient when the stock prices are dependent on all market available information on a given market or stock. When investors either institutional or individual investors invest money into the stock market, the major objective is to more returns on the investment put. The investors don’t just only focus on the profitability performance but also perform much better than the market itself. No investor has an upper hand in predicting the returns on the investment on the stock because it’s not possible to access the information that is not available on the market (Besley and ...

Introduction

Money plays a vital role in the determination of income and employment . interest rate are a significant determinant of aggregate spending ad the Federal Reserve which controls the money growth and the interest rates is the first institution to be blamed when the economy of in trouble. Now the question arises what is money.

Money Definition

Money is a medium of exchange. Money is divided into commodity money and token money. To some economist there is difference between commodity money and token money. A commodity money is a medium of exchange which has a commodity value as distinct from a value ...