Market efficiency, Financial Management

Assignment Help:

Market Efficiency

Though there are various markets present in the financial system, the ease with which the transfer of funds take place depends on the level of efficiency present in the financial markets. A market is considered as perfect if it has the following characteristics:

  • All players in the market are price takers.
  • This situation will be possible when all the players in the market have all the information relating to the security and the market price of the security reflects all the available information.
  • No significant regulations on the transfer of funds exists.
  • The flow of funds within the market and between the markets should not be restricted by government regulations. There should be free flow of funds from one market to the other.
  • Very low/insignificant transaction costs.

Finally, transaction costs will depend on the trading and settlement processes. Transparency in the trading mechanism and shorter settlement periods are critical for low transaction costs.

However, most of the financial markets are still imperfect and are yet to be developed. The imperfections present in the markets may have an adverse impact on the players of these markets. Further, due to the interlinkage of the financial markets, the factors affecting one market may have a direct or indirect impact on the others also.

 


Related Discussions:- Market efficiency

What are the financing and investing decision, What are the Financing and i...

What are the Financing and investing decision Financing and investing decisions are closely related as the company is going toraise money to invest in a project or assets. Thos

Call schedule, It shows the date and corresponding prices at which th...

It shows the date and corresponding prices at which the issuer can call back bonds. The issuer pays higher premium over the par value of the bond if the bond is c

Premium, The amount by which the market price exceeds the conversion ...

The amount by which the market price exceeds the conversion value or the investment value called the premium. When expressed as a percentage, it is given by,

Debt securities , lso from the auditor's report, they have reported that th...

lso from the auditor's report, they have reported that the company has used funds raised on short-term basis for long-term investment. The company has purchased certain fixed asses

Procedure of measurement of future value, Procedure of measurement of Futur...

Procedure of measurement of Future Value If we are getting a return of 10 % in one year then what is the return we are going to get in two years? 20 %, right. What about return

Assignment, I should write assignment on financial management ,but have no ...

I should write assignment on financial management ,but have no idea how to start and how to develop. Please help me

Three-phase source voltages and phase sequence, Q. Three-phase source volta...

Q. Three-phase source voltages and phase sequence? The elementary three-phase, two-pole generator shown in Figure has three identical stator coils (aa, bb, and cc) of one or

State about the quick ratio - position ratios, State about the Quick ratio ...

State about the Quick ratio or acid test Quick ratio = Current assets less inventories /Current liabilities(times) This  ratio  measures  immediate  solvency  of  a  busin

Types of financial investments, Question: (a) Give the four main types...

Question: (a) Give the four main types of financial investments and state the risks and bene ts associated to each type. (b) (i) Let k(t; T; s) denotes the return at time t

Business analysis, 1. Each student has been allocated one Australian compan...

1. Each student has been allocated one Australian company. This information is available in the unit website. You should check that a company is assigned to you. 2. It is your r

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd