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Essay Available:
Pages:
7 pages/≈1925 words
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Check Instructions
Style:
Harvard
Subject:
Accounting, Finance, SPSS
Type:
Research Paper
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 44.23
Topic:

International Finance. Accounting, Finance, SPSS Research Paper

Research Paper Instructions:

There are two (2) essay questions. Each question is worth 50 marks. Answer ALL questions.
1. Main Purpose 
The main purpose of this assignment is to make students familiar with the different regimes of foreign exchange and consider the importance of efficient capital markets. All students are required to meet the appropriate learning outcomes of the module. 
2. Assignment Requirements 
Your assignment requires you to; 
1. Evaluate three forms of Efficient Market Hypothesis (EMH) and discuss the degree to which existing empirical evidence supports each of the three forms. 
Total Marks (50 Marks)
2. Critically assess how a fixed exchange rate regime differ from a system of floating exchange rates? Evaluate why a country should intervene in the foreign exchange market under a fixed exchange. 
Total Marks (50 Marks)
To enable you undertake this task you must consult the relevant literature on international financial markets. In your essay, for part 1, you will need to critically analyse the three forms of efficient market hypothesis with supporting examples, where appropriate. For part 2 consider salient features of a fixed exchange and floating exchange rates with supporting examples. Consider whether a country should intervene in the foreign exchange market under a fixed exchange regime and its implications. 
3. The Written Essay 
The written assignment should be 2000 words in length (maximum), word-processed. 1000 words each for parts 1 and 2.
4. Assessment and Marking Scheme 
Consider the following indicative points when writing the essay: 
Define and evaluate the concept of Efficient Market Hypothesis (EMH) and support its validity using existing empirical evidence and practice
Provide critical interpretation of the implications of EMH
Discussion of how a fixed exchange rate regime differ from a system of floating exchange rates. Consider theory and practice
In terms of referencing, you are required to use the Harvard system of citations.

Research Paper Sample Content Preview:

Finance
By (name)
Name of the Class (Course)
Professor (Tutor)
Name of the University
Date
INTERNATIONAL FINANCE
Part 1: Efficient Market Hypothesis
Efficient Market Hypothesis has been the fundamental proposition in international finance since the 1970s. Additionally it is the most researched hypotheses in social sciences. EMH is an investment theory that is derived from the theories of Eugene Fama’s in his book, ‘Efficient Capital Markets: A Review of Theory and Empirical Work’ in 1970. EMH states that all known information connected to investment securities such as stock is already replicated in the prices of these securities. Therefore, with EMH, all investors are equal because of the market equilibrium. The use of EMH is one of the main reason why investors prefer to use passive investment strategy. In the market, there is always a big number of purchasers and venders and the flow constantly efficient. The purpose of this section is to analyze three forms of EMH as well as the degree at which the present empirical proof supports each of the three types.
Strong Form EMH
The strong form of the EMH is the most convenient category of the EMH. Under this category, it is believed that the marketplace is normally effective if all the information is significant to the share whether it is accessible to the investors and is replicated on the market values of the products. According to EMH, investors cannot make any returns on their investments in case these investments can exceed the market returns irrespective of the information that is retrieved from the research. For example if the market prices are lower than the actual value, then it can be vindicated that by the same rate of the information that is privately held and the data of the holders can exploit the process by buying the shares. During this particular moment, investors will stop with drawing and purchasing from the market and this will result to an equilibrium. Therefore it is the strongest category of the EMH and the most convenient.
The strong tests of the effective markets model are pertained with the available information that is reflected in prices such that no individual has higher profits in the market. Different authors have conducted some research about the EMH and have provided some empirical evidence on the same. For example, Potoski & Swist (2012) carried out a research on the strong form efficiency based on assumptions that financial institutions use references available to access to information that investors do not have access to. They used samples of 3,270 samples between 2005 and 2010. The results indicate evidence that the strong form of EMH has the features of the WIG 20 index shares outlined on the Warsaw Stock Exchange. Based on these three empirical studies, there are mixed findings of both the strong and weak forms of EPM. Furthermore, different methodologies have been used to study and test a strong form of hypotheses in different countries. 
Semi-Strong Form of EMH
This form of EMH states that a market can only be resourceful if only all the pertinent information that is available to the public is replicated in the market price. Under this form, the market must immediately résum&e...
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