Advanced Portfolio Management Research Paper Example | Topics and Well Written Essays - 3750 words

Advanced Portfolio Management - Research Paper ExampleEfficient market venture works on the assumption that on the average the investors mystify rational expectation. With available information individual investors reactions argon random and follow a normal distribution pattern. This in turn implies that no individual investor can outperform the market on a consistent basis. Individual investors may everyplace or under react individual investors may outperform or underperform for a short period. But all the deviations are random in nature and will self-correct in a short period. Thus market will always be right (Copeland and Weston, 1988). Among the three forms of faculty, the weak form efficiency hypothesizes that the contemporary market price does not reflect fair value and only reflects the past prices. Since it does not adapt to a change in current information, the future price cannot be predicted from past or current prices.Empirical evidence does not always support weak fo rm efficiency of a market. There have been noted differences between gunstock market behavior in developed and developing countries. However research findings in different markets are not universally accepted (Elango & Hussein, 2010). Many comparative studies have been done to examine performances of many different stocks and variables results have been observed (Solink, 1973 Cooper, 1982 Urrutia, 1995 Dahel & Laabas, 1999 Rao & Shankaraiah, 2003). To compare the performance of stock markets in a rapidly changing economic scenario worldwide, it was decided to check for weak form efficiency in cardinal developed countries and in two countries belonging to Gulf Co-operation Council for a considerably long period of time in very recent past. Four countries, the names of their stock indices considered and time periods chosen given below. Every week trades take place on 5 days of the week and the other two days are excluded from the analysis. However, given that the countries have dif ferent customs,