Finance market Essay Example | Topics and Well Written Essays - 2500 words

Finance market - Essay Example RWT basically stated that speculative price changes were independent and identically distributed, so that the past price data had no predictive power for future share price movements. RWT also stated that the distribution of price changes from transaction to transaction had finite variance. In addition, if transactions were fairly uniformly spread across time and were large in numbers, then the Central Limit Theorem suggested that the price changes would be normally distributed. Kendall (1953) calculated the first differences of twenty-two different speculative price series at weekly intervals from 486 to 2,387 terms. He concluded that the random changes from one term to the next were large and obfuscated any systematic effect which may be present. In fact, he stated that 'the data behaved almost like a wandering series' (random walk). Specifically, an analysis of share price movement revealed little serial correlation, with the conclusion that there was very little predictability of movements in share prices for a week ahead without extraneous information. In 1959, Roberts generated a pattern of market levels and changes akin to real levels and changes in the Dow Jones Industrial Index. He estimated the probability of different share price movements over time by using a frequency distribution of historical changes in the weekly market index, and assumed weekly changes were independently drawn from a normal distribution with a mean of + 0.5 and a standard deviation of 5.0. He concluded that changes in security prices behaved as if they had been generated by a simple chance model .The fundamental concept behind random walk theory is that competition in perfect markets would remove excess economic profits, except from those parties who exercised some degree of market monopoly. This meant that a trader with specialized information about future events could profit from the monopolistic access to information, but that fundamental and technical analysts who rely on p ast information should not expect to have speculative gains.From the empirical evidence and theory of random walks arose the theory of efficient markets. Fama (1970, 1976) gives out the details of the early literature on both the theoretical and empirical foundations of the Efficient Markets Hypothesis, whilst Cuthbertson (1996) summarizes the latest research developments. While EMH has empirical findings in respect of aspects like market perfection and information availability when combined with practices like trading platform and transaction costs may produce only marginal and well calculated opportunities for speculative gains; many other economists have quoted the existence of stock market bubbles. A bubble is generally defined by the economists as a deviation from stock market fundamentals; whereas Kindleberger reckons a bubble as an upward price movement over an extended range that tends to implode (Kindleberger 1996). By the same analogy an extended negative bubble is a crash . The existence of such situations has immediate

Reading Response Questions for One.Life ( Preface chapters - Chapter Essay

Reading Response Questions for One.Life ( Preface chapters - Chapter 5) - Essay Example Indeed, McKnight explains that many people have misinterpreted Jesus’ teachings about the kingdom. To many Christians, it only entails going to church and reading the Bible. However, Jesus emphasized that God’s kingdom entails going beyond this and identifying a dream which has been chosen for them by God. Ubuntu is a term associated with African Traditional Religion. It means humanness. In other words, it is a spirit of kindness and togetherness. Actually, Africans were great egalitarians who believed in the kinship system, sharing and egalitarianism. I think it was supported by Jesus because He preached about generosity, love and brotherhood. 5. If you do not already know the Lords Prayer by heart, I recommend you memorize and pray it daily throughout this class on Christian Faith and Life. Write it out here in whatever version of the Bible youve been using in your study. (You can find this prayer that Jesus taught his disciples in Matthew 6: 9-13 or Luke 11: