Chapter One Introduction - Free Essay Example

Sample details Pages: 6 Words: 1691 Downloads: 4 Date added: 2017/06/26 Category Statistics Essay Did you like this example? 1.1 Aim of Chapter This chapter aims to give an overview of the dissertation. To start with, general backgrounds concerning the efficient market hypothesis (EMH), behavioral finance and market anomalies are mentioned briefly in order to provide better understanding about the modern area of financial study. Then, two opposed concepts of investment strategies, Contrarian Strategies and Momentum Strategies, are addressed leading to the next section which mention the main purpose and summary of findings of this research. Lastly, the structure of the dissertation has been outlined at the end of the chapter. Don’t waste time! Our writers will create an original "Chapter One: Introduction" essay for you Create order 1.2 Background of knowledge about efficient market hypothesis (EMH) The theory of market hypothesis (EMH) is one of the most crucial theories in standard finance that have been revised and tested over the past few decades to uncover its imperfection. This theory was introduced by Professor Eugene Fama in 1970. As defined in his article, the efficient market is the market where securities are priced, at any point of time, by accessible information. It is believed that the markets are extremely efficient that individual stocks and stock markets as a whole are fully reflected by all available information. When new information enters the market, stock prices incorporates the news and responds very quickly with our any delays; therefore security prices are the accurate source of data which can be used as signals in trading investment process. By examining the level of how relevant information reflects in security prices, Fama (1970) categorizes the market efficiency into three forms: weak, semi-strong and strong forms of EMH. However, this theory relies o n certain assumptions, for example, there is no transaction cost paid in trading securities and it is costless for all participants to gather information available in the markets. The weak form of EMH is the condition that exists when share prices are fully reflected by trading data such as past price (or return) histories. For that reason, investors cannot exploit mispriced securities and earn excess returns by using historical stock quotations or charts. Semi-strong form of EMH is the condition that exists when share prices incorporates market trading data and publicly available information. The examples of this type of information are announcements of annual earnings, stock splits, annual reports, analyst forecasts, etc. As a consequence, investors cannot exhibit gains by rely only on fundamental and macro-economics data. Strong form of EMH is the condition that exists when market prices of stocks adjusted according to every kind of accessible information. This includes hidden inside information which are known among specific group in the company (e.g. the top executives and group of operational managers) or some individuals that have monopolistic access to information (e.g. managements of mutual funds). Thus, abnormal profits cannot be generated by either using internal or external information of the company. In other words, both individual and professional investors cannot beat the market and earn excess returns in every way due to the perfect efficiency of the stock markets. As claimed by efficient market hypothesis, market will be efficient in weak form if the past and future returns are not correlated, in other words, they are independently and identically distributed. Thus this refers to the idea of the random walk model. However, Fama (1970) affirms in his literature that the test of random walk model leads to the evidence of weak-form EMH, but not vice versa. Burton (2003) identifies the definition of à ¢Ã¢â€š ¬Ã…“random walkà ¢Ã¢â€š ¬? in his paper that it is the state where the flow of information on specific day is incorporated in stock prices on that day only, not for the subsequent period. The news announced in the market is unpredictable, thus stock prices changes are displayed in a random pattern. As a consequence, uninformed investors are able to earn equal rate of returns as what achieved by professional investors if they long position in well-diversified portfolios. In his paper, Burton tries to examine the criticism of the efficient market hypothesis and the idea that stock prices can be predicted based on initial valuation parameters (e.g. price-earnings multiple or dividend yield). He uses time-series analyses of accounting numbers and multiples and comes up with the results revealing that the stocks market are efficient enough, but it is difficult to predict the share prices. Moreover, the findings also reveal that anoma lous behavior of stock prices may exist, but investors cannot create portfolio trading opportunity and gains excess risk adjusted returns. Fama (1997) states in his study that there are many literatures concerning behavioral finance and market anomalies challenge the hypothesis of efficient market. The opposed idea suggests that stock prices slowly absorb information available, which can be denoted as the market inefficiency. 1.3 Behavioral Finance and Market Anomalies Behavioral finance is the new area of financial study concentrating on the psychology of market and its participants. This field of study has started to appear in many academic journals from 1990s. Shefrin (2002) publish a book regarding the behavioral finance trying to find and explain reason behind the behavior of investors, both professional and individual. The author suggests that investors, who are sometimes prone to commend mistakes and errors, tend to rely on their emotional and psychological forces, thus this causes many market anomalies, the state where there is inefficiency in stock markets, to take place. Two well-known papers of Berberis, Shleifer, and Vishny (1998) and Daniel, Hirshleifer, and Subramanyam (1997) proposed behavioral models to explain the conflicting theory of efficient market hypothesis. They reject the previous belief with the proposition that the behavioral biases (i.e. judgment bias) of investors cause the anomalies and knock down the old theory behind. They present the concepts of over-reaction and under-reaction which accommodates the existence of long-term excess returns. Berberis, Shleifer, and Vishny (1996) create a model based on cognitive psychology of two judgment biases: the representativeness bias and conservatism. In their study, the empirical findings of investorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ behaviors are divided into two main groups: one perceives that earnings are mean-reverting. Thus, stock prices show a delayed short-term response and under-react to change in earnings. Another group believes that firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ earnings are trending which leads to the overreaction in stock prices. The earnings follow the random walk process; hence, this leads to reversal of long-term returns. Daniel, Hirshleifer, and Subramanyam (1997) have different views in conducting the behavioral models. They split the sample group of investors into two categories: informed and uninformed investors. They find that judgment biases are not found among the uninformed investors, but detected among the informed ones. Informed investors are the group of people that determine the stock prices. They are exposed to two kinds of behavioral biases: overconfidence and self-attribution biases. Overconfidence causes the overstatement in investorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ perception of their private stock prices signals, while self-attribution bias causes investors to underweight the public signals about the value of companies. Therefore, the circumstance of overreaction to private information and under-reaction to public information generates continuation of stock returns in the short run. Overreaction leads to the concept of contrarian investing, whereas underreaction induces the theory of momentum inve sting. 1.4 Investment Strategies 1.4.1 Contrarian Investing Contrarian investing is the strategy that aims to generate profits by investing in the direction that goes against the conventional investors. In normal condition, short-sighted investors, who overweight the recent trends of past stocks prices and use this information to predict future prices, engage in buying stocks with good performance in the past hoping that it will continue to perform well in the near future. However, contrarian investing focuses on the opposite direction. People who employ this strategy tend to buy the shares that others have given up on due to either their poor past performance or their miserable and unclear future prospect. They expect the market to react to the behavior of the crowd, so that they can exploit the mispricing of securities and earn abnormal returns. 1.4.2 Momentum Investing Momentum investing is the strategy that is the opposite of contrarian investing. People who employ this strategy seek for making profits by relying on the continuance of the past stock prices and trends in the market in an attempt to predict prospective prices in the future. It is believed that the good stocks with price increases and strong performance in the past will keep on outperforming and generate gains in the future, and vice versa for the poor stocks. Thus, momentum investing suggests investors to hold stocks that had high returns and sell those that had low returns (buy winners and sell losers). The detailed of these two investment strategies will be discussed in the next chapter which both strategies will be supported by existing empirical evidences from several renowned academic papers. 1.5 Purpose and Findings of the Research The purpose of this research is to examine the profitability of momentum strategies, which is one of the most debated investment strategies in financial study, in the UK stock market. This paper employs the prices and returns data of FTSE 100 composites à ¢Ã¢â€š ¬Ã¢â‚¬Å" the top 100 biggest companies in London Stock Exchange à ¢Ã¢â€š ¬Ã¢â‚¬Å" as a proxy of the whole UK stocks. The observation period lies between July 21, 2000 to July 21, 2010, which gives a total of 10 years period. Thus, the main contribution of this study is to comprehensively revise existing literatures and employ the more up-to-date the data set with the well-known procedure to test the existence of momentum investing and its profitability in the UK market. However, the findings reveal no evidence of momentum profitability in the observed time for UK stock market, which are inconsistent with the prior research conducted using the different sample periods. 1.6 Structure of the Dissertation The rest of the dissertation is organized as follows: Chapter two comments on the review of the literature regarding the momentum strategies and its criticism, including the opposed theory of contrarian investing. Academic papers concerning the momentum strategies are divided into categories regarding the region of data employed. We carefully asserted and analyzed each paper to find the gaps which are necessary to be concerned for further researches in the future. Then, chapter three gives an overview of data and methodology used in this research. Chapter four shows the summary statistics of data, empirical results and interpretations. Finally, last chapter provides a summary of the results, as well as the limitations of the study.

Prussia s Influence On The World s Foundational...

Prussia was a kingdom that existed nearly half a millennium ago as a patchwork of territorial fragments, with no significant resources founded yet or a coherent culture. With its capital in Berlin, â€Å"Prussia grew from being a small, poor, disregarded medieval state into one of the most vigorous and powerful nations in Europe.†1 Prussia s involvement in the continent s foundational religious and political conflagrations. From the devastations of the Thirty Years War through centuries of political machinations to the dissolution of the Holy Roman Empire. From the enlightenment of Frederick the Great to the destructive conquests of Napoleon. Then from the Iron and Blood policies of Bismarck to the creation of the German Empire in 1871, and all that implied for the tumultuous twentieth century. Prussia’s government was monarchical from the 1700s all the way to the Great War. During all that time it increasingly valued a strong, formidable army, but was not so formidable when it met Napoleon during the Coalition Wars. It put forth effort in training and spending much of its money towards weapons and uniforms. The military technology and strategy of Prussia during 1860s and 1870s was outstanding. Especially with the mind of Otto von Bismarck (1815-1898) leading the way against Denmark, and later Austria, and then with his sneaky tactics he used against France before the Franco-Prussian war in 1870. Prior to the unification in 1871, Germany was made up of thirty-nineShow MoreRelatedOne Significant Change That Has Occurred in the World Between 1900 and 2005. Explain the Impact This Change Has Made on Our Lives and Why It Is an Important Change.163893 Words   |  656 PagesStory of Reo Joe: Work, Kin, and Community in Autotown, U.S.A. Van Gosse and Richard Moser, eds., The World the Sixties Made: Politics and Culture in Recent America Joanne Meyerowitz, ed., History and September 11th John McMillian and Paul Buhle, eds., The New Left Revisited David M. Scobey, Empire City: The Making and Meaning of the New York City Landscape Gerda Lerner, Fireweed: A Political Autobiography Allida M. Black, ed., Modern American Queer History Eric Sandweiss, St. Louis: The Evolution

My Hands That Close To Your Neck Free Essays

In anticipation of an upcoming Ethical Dilemma, I was striving to prepare myself for a choice I might have to make. I wanted to make the choice that gave an accurate impression of who I am; and who I am is someone who wants to be ethical, evolved, yet not at all a oilpan for the machinations of the morally corrupt. Here’s the situation: I lived in a small town, where all your actions can affect how you are viewed, your ability to function in that town, or do business, or simply exist in harmony; and that view can be reflected back to you with dizzying speed. We will write a custom essay sample on My Hands That Close To Your Neck or any similar topic only for you Order Now I was to be involved in a public event, and worried that I might cross paths with a particular person, whom I’ll call the Big Eraser. This person lived in my home, used my things, brought no belongings, and in fact had none–only a white garbage sack of items†¦not due to youth (this person is pushing 40), and not due to an inability to be self-supporting. I had been loving, generous and supportive to B.E., and what I got in return was sloth, abuse, lies, deceit and eventual admissions of hatred after I removed B.E. from my home. This person had treated me with disregard, cost me money, frustration and stress, and managed to get away with it for various reasons. I learned some important lessons–I believe that everyone with whom we cross paths can be seen as a teacher. We don’t have to like them for that to be true. So, this was a small town, as I mentioned, and I was set up to provide a service, and fully expected B.E. to attend this public event, and that it might necessarily put me in a position to provide this service to B.E., should that request be made. It’s important to note that this service is Therapeutic Touch Treatments, and therefore requires me to impart love and healing–the last thing I feel I am capable of giving to this person. My response to this hypothetically anticipated request will also be rather public, and while I didn’t want to seem hostile, I also didn’t want to appear a doormat, nor did I wish to impart â€Å"reward† or seem to condone or approve of B.E., only for the sake of social graces. I was not disingenuous enough to pretend I had affection for this person. Add to this, the fact that B.E. has repeatedly avoided karmic debt, and it irks me that B.E. has been able to charm around and over everyone until they personally experience the truth of who B.E. really is. This is a person who was a self-confessed former drug dealer/maker, who damaged or perhaps was responsible for the deaths of an unknown number of people–maybe even kids–and had the unmitigated gall to brag about it. This is a person who has lied to others (including myself, initially) about burn scars, stating that they were received in some heroic gesture, when really the burns were received in a drug lab fire while cooking Methamphetamine. Yet B.E. had managed to snow everyone else, and also land a great job that paid well and offered security–this, with a criminal past, with a history of dodging taxes, and without a GED or High School Diploma. So in regard to my response to B.E. in this scenario, I have a generalized angst attached, i.e., â€Å"Why do good things happen to bad people?† These are examples of possible skewing of perception, as well as Internal Noise. Now, an argument can be made that The Wheel of Karma spins on its own, and does not require that we manually turn it. If a karmic debt is due, it will be paid, one way or another, and it is the most healthy thing for me to keep my hands off that wheel. I remind myself of this frequently, when I have to deal with people like B.E. Back to the Public Event in which I might cross paths with this person: Should B.E. approach my area and say, â€Å"I’d like a treatment,† my response is crucial for many reasons. In my mind, I had conjured possible responses to such a request (testing hypothesis): â€Å"F*** you.† (anger) â€Å"Are you out of your mind? Get out of my face, Loser.† (anger + judgment) (suggested by my best friend:) â€Å"I would love to give you a treatment†¦but for you, it will cost $700, because that’s one of the debts you left for me.† (sarcasm + bitterness) â€Å"It’s not a good idea for me to have my hands that close to your neck.† (sarcasm + veiled threat) â€Å"I don’t think that would be a good idea.† (avoidance + statement of fact) â€Å"Sorry, I’m on a break.† (avoidance + a lie + non-confrontation)) â€Å"Let me think about that for a while.† (avoidance + stall + nonconfrontation) It is important to me that I make choices rooted in an evolved mind†¦my more primitive side wants to lash out. My intellectual side wants to take a firm stance and my spiritual side wants to put only loving things into my environment and those around me, because that’s what I want to get back. I am a great fan of having all those parts of myself satisfied, yet I suspect this isn’t possible. I have to choose. If I choose the â€Å"High Road† and say, â€Å"Sure, sit right down here and let me give you some love and healing.† Then I feel I have chumped myself, compromised my integrity, become spineless, have condoned reprehensible choices, and somehow validated B.E.’s evil ways. Why would I want to assist someone in their misbehavior? If I allow myself to become angry, I’m ultimately just hurting myself with stress, and giving B.E. power I don’t wish B.E. to have. If I avoid B.E. and the situation, I feel cowardly, yet B.E. will probably order another beer and wander off, and I won’t have to deal with it further†¦ Of course, this scenario might never unfold, but I don’t feel my consideration and energy is moot; I still need to understand how to deal with it, and I still need to ask myself these types of questions. Since B.E. never appeared at the event, my angst and ethical hand-wringing became a moot point. I still don’t know the answers to these questions. I never got the chance to act on the decision, even though I was relatively sure what my decision would be. If I had to say how I might handle it now (and how I would have handled it then, had I gotten the chance) I would say that I would have chosen the last response: â€Å"Let me think about that for a while.† This non-confrontational approach avoids conflict, defuses the situation, and also doesn’t feel like it costs me any of my own integrity. I had an idea of expected behavior in that my choice of responses would have caused B.E. to wander off, without any provocation. It’s quite possible that I would have been met with unexpected behavior, in that B.E. could have continued to engage me in a confrontational way, rather than to wander off. Either way, in order to create a list of responses, I had to understand my own mental models, and making the list alone was enough to inform me of my own place in this ethical dilemma, and it forced me to consider the type of person I wanted to be. How to cite My Hands That Close To Your Neck, Essay examples

Managing Diversity for Culture - Equality and Communication

Question: Discuss about theManaging Diversity for Culture, Equality and Communication. Answer: The organization is accompanied by the complex set of factors which is evaluated by the managers and other policies makers to formulate the business plans and strategies. The effective manager means to get the assigned work done in best efficient manner. He ensures that allocated work is managed and done in best possible manner. Ideally, the management faces issues related to managing diversity in the contemporary workplace. A manager is a person who takes all the strategic decisions and manages employees to achieve certain goals and objectives. A workplace in the corporate world is increasingly becoming more diverse than they were in past. Therefore, in order to increase the overall effectiveness of the company, employees are hired from the different places and culture. Effective managers are very well aware that managing employees with the diverse backgrounds requires the different approach than it does for management of employees with the similar background. The effective manager should be more inclined toward learning employee's behavior and their needs. The main point which needs to be considered by a manager to diversity in the organization is related to employee's perception, culture, equality and communication among them (Bashev, 2016). Diversity is the state of being diverse. The diversity in an organization arises when there are employees coming in the one roof from the diverse backgrounds. This diversity plays important role in the contemporary workplace. It is the process of attracting, developing, maintaining the talented workforce. This contemporary workplace eliminates issues like sexual harassment, cultural issues and other problems in determined approach. The managers in organization formulate standards work policies to manage the diversity. It helps employees to adopt standard working environment and influence them to follow only one culture in their working process. As per the perception of this, it is reflected that companies with the diverse workforce often perform outstandingly. However, in order to drag effective outcomes from the implemented diversified strategic plans, managers need to follow following points which are given as below. Set standards objectives and goals. It is evaluated that if standards objectives and goals are set for the employees then it will give general objectives to each and every employee irrespective of their culture and diverse working environment. Communicate directly In case of diversity, managers should use direct communication methods which could assist him to directly communicate with the employees in a systematic manner. If managers could use proper communication methods based on the unambiguous guidelines then it will increase the overall outcomes of business (Jaeger, Kim and Butt, 2016). Acceptance of feedbacks It is evaluated that managers need to take proper feedbacks from the employee's onetime basis. If the manager could eliminate the employee's issue by taking proper feedbacks then it will increase the overall output and efficiency of the business (Kalev, 2014.). There are several questions which could be undertaken to make effective use of managerial skills to in the diversified organization culture. How could managers reduce the employee turnover of business? How could efficient managers reduce the diversify complexity and manage multicultural workplace? How could diversity management increase the effectiveness of the communication in the organization? As per the views of Garca-Meca, Garca-Snchez, and Martnez-Ferrero, (2015)., it is revealed that employees need to work as the team in organization irrespective of their culture, perception, and values. Managers need to motivate team spirit in employees so that they could learn to work in the multicultural workplace. As stated by, Hirsh and Cha, (2017), it is depicted that communications methods need to be managed by managers in maintain diversified work culture. If the proper communication channel is used by managers then it will reduce the complexity of the diversified work culture in an effective manner. As per the perception of, Lampe and Hilgers, (2015) it is divulged that values, perception, and personal factors highly influence employees in their working. If managers motivate employees to follow standard work culture then it will not only increase the team spirit but also increase the overall outcomes of the organization. I have several skills such as managing complex problems, forecasting future issues and analytical skills. I am always inclined towards learning new things. I have managed various issues through by divergent thinking and analytical skill. The managerial style which I will propose would be persuasive management style. This style helps in evaluating the problems and takes control over the managerial decisions. It reduces issues and problems of the diversified workforce. Nonetheless, as the future is uncertain, I could also change by managerial style based on the internal and external factors of the business. If I will become the future manager then I will first analyze the problems and issues which my employees will face in an organization. After that, I will formulate the proper strategies program to mitigate the possible issues. I have analyzed that if employees are given proper direction and standards work policies then they could easily coup with the diverse organizational culture in the effective manner (McKay and Avery, 2015). After evaluating various multinational companies, I have inferred that persuasive managerial style highly influences employees. It gives new learning path and helps employees to learn the new style of working. However, manager, by using this persuasive style could evaluate all the internal and external factors which may affect the employees in their working. In addition to this, the main communication style which I would use in my future managerial skills would be direct communication methods. It will include observation, interview, and meeting with employees (Park and Lee, 2015). The managing diversity in the organization is the key to success. It is evaluated that if the manager works efficiently then it will decrease the business complexity and increases the overall outcomes of the organization. Now, in the end, it could be inferred that managing diversity will not only decrease the working complexity but also increase the overall outcome of an organization. References Bashev, H., 2016. The sustainability of farms.Economics,1(2), pp.20-53. Garca-Meca, E., Garca-Snchez, I.M. and Martnez-Ferrero, J., 2015. Board diversity and its effects on bank performance: An international analysis.Journal of Banking Finance,53, pp.202-214. Hirsh, E. and Cha, Y., 2017. Mandating change: The impact of court-ordered policy changes on managerial diversity.ILR Review,70(1), pp.42-72. Jaeger, A.M., Kim, S.S. and Butt, A.N., 2016. Leveraging values diversity: The emergence and implications of a global managerial culture in global organizations.Management International Review,56(2), pp.227-254. Kalev, A., 2014. How you downsize is who you downsize: Biased formalization, accountability, and managerial diversity.American Sociological Review,79(1), pp.109-135. Lampe, H.W. and Hilgers, D., 2015. Trajectories of efficiency measurement: A bibliometric analysis of DEA and SFA.European Journal of Operational Research,240(1), pp.1-21. McKay, P.F. and Avery, D.R., 2015. Diversity climate in organizations: Current wisdom and domains of uncertainty. InResearch in personnel and human resources management(pp. 191-233). Emerald Group Publishing Limited. Park, H.G., and Lee, Y.J., 2015. The Efficiency and Productivity Analysis of Large Logistics Providers Services in Korea.The Asian Journal of Shipping and Logistics,31(4), pp.469-476.