Explain the concept of an efficient market in share prices

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Reference no: EM133334484

Questions:

A) Explain the concept of an efficient market in share prices. Evidence of a random walk in prices and returns may indicate efficiency. Describe how evidence of a random walk can be established. Conclude by discussing whether financial asset values do follow a random pattern.

B) Identify the major categories of funding that businesses use to finance their activities. Consider the relative importance of each source, and identify any evidence of change in recent years. Assess any implications of these trends. (20% of Question) (Hint: Debt, Equity: preference and ordinary)

c) Outline the main features of Common Shares. Include an outline of the powers of shareholders, and of when and how they can be exercised. Suggest circumstances when shareholders do determine company policy. Identify the major investors in U.K. and U.S. equity. Briefly speculate on the reasons for their investment, and on when they do influence company policy.

d) Identify the costs of financial distress. Consider both bankruptcy related costs and the costs associated with distorted decision-taking. Describe how these costs are incurred, and explain how they will impact on company value. Use examples that will demonstrate your points.

Reference no: EM133334484

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