Nature of the efficient markets hypothesis, Corporate Finance

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Question 1:

i) Check the nature of the efficient markets hypothesis (EMH).

ii) Describe how the different forms of efficiency can be tested. Support your answer with some empirical evidences.

iii) Show the implications of the EMH for users of the financial markets.

Question 2:

i) Analyse the dividend policy in the context of Modigliani-Miller.

ii) Show the Lintner model and its implications.

iii) Analyse the extent to which information is a credible signal in dividend policy. Support your answer with solid empirical evidences.

iv) Fully describe the link between agency cost and dividend policy and discuss briefly the implications.


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