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Efficient Market Hypothesis Analysis

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In this coursework we are going to analyze the stock market anomalies concerning the Efficient Market Hypothesis (EMH). To begin with, many researchers have reached this topic since Eugene Fama (1965) published his work concerning the Efficient Market Hypothesis. More extensively, in the modern academic literature of finance market anomalies have gained even more supporters and constitute one of the most popular phenomena for research. Market anomalies play a significant role in the modern economy theory since both investors and academics wish to testify and conclude to the reasons they exist and how they can be forecasted. Before we proceed deeper to the analysis of the market anomalies we first have to define them. Market Anomalies …show more content…

Basu (1972) published his study concerning the relation of the price to earnings ratio with the market efficiency, concluding to the better performance of lower price to earnings ratio securities. Banz(1981) observed that small size firms have higher returns. Even more researches have been conducted some as further studies and some as a different point of view, showing that until nowadays numerous anomalies have been recorded. Such categories are Calendar effects which include anomalies based on particular time and on the other hand there are those anomalies that are based on particular events, relying on the sensibility such as book to market ratio, size effect and price to earnings …show more content…

Until nowadays, the market anomalies continue to exist in the best interest for researchers and practitioners who try to define the reason of existence of such events. In an international level, researchers try to bring in the light an outcome that could constitute a benchmark for further study concluding to some interesting alternatives. More specifically, after massive research, especially in educational institutions, there are studies claiming that the weekend effect is an aftereffect of the management techniques of the market exchanges overseas. The above point of view was elaborated from those who claim that market was proved inefficient and the seasonality was a statistically poor model. By the term seasonality it is meant the effects that deal with the time horizon as the main pattern of the anomalies existing in the market efficiency. Researchers and practitioners try to specify a certain period of time in order to study, elaborate and conclude how this events reflect to the stock

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