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Paper Topic:

business Finance assignment

EMH , and hence lack of instantaneous incorporation into share prices , the clout which some market participants have and employ such as financial institutions and the inherent expertise of participants such as the sophisticated professional investors

The Australian Stock Exchange

The Australian Stock Exchange - commonly referred to as the ASX - is a publicly listed exchange formed in the year 1987 . It was constituted through the amalgamation of six independent stock exchanges located in the state capitals of each of Australia 's states and is "co-regulated by the Australian Securities and Investments Commission

. The major stocks traded in ASX include BHP Billiton , Commonwealth bank of Australia , Telstra Corporation , Rio Tinto , National Australia Bank and Australia and New Zealand banking group . These stocks are the biggest vis-a-vis market capitalization in the ASX . Figures at March 30 , 2007 showed that there were 2014 stocks listed on the ASX , and capitalization was AU 1 .39 trillion

Efficiency and the ASX

When aggregate share price index data (from the period 1975-92 ) was used to conduct tests of both weak and semi-strong forms of the EMH for Australia , it was found that past returns did have predictive power for current returns , which is inconsistent with the weak EMH . However , the degree of predictability was low , the results were robust , but the correlation was stronger in daily data as compared to weekly and monthly returns , and was visibly lesser in the latter part of the sample period of this study . For testing semi-strong efficiency , the researcher used the techniques of cointegration and Granger causality . Findings regarding cointegration were in line with market efficiency as it was found that the indexes of Australia and New Zealand were not cointegrated , in scenarios of daily , weekly and monthly data . There was predictability of results , but similar to the test for weak...

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