12 Fin 301 Market efficiency Raising Capital No Right Issue Ulearn

12 Fin 301 Market efficiency Raising Capital No Right Issue Ulearn

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Market Efficiency
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2 Market Efficiency § Efficient market: § Prices reflect  all  available, relevant information § New information is immediately reflected in  prices § Impossible to make a killing – in an efficient  market all investments have zero NPV § NYSE, TSE: major markets are quite  efficient § Exactly what information is reflected in  price?
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3 Strong-form Efficiency § Stock prices reflect all information,  public   and  private § No  inside information ! (Enron?) § Evidence of profitable insider trading  makes strong-form efficiency questionable § Who is Andrew Rankin? ( RBC Dominion )
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4 What happened on Nov. 23 2005? on November 23,  2005,  Finance  Minister  Ralph  Goodale  made a surprise announcement that the  In late 2005 investors expected that the government would tax income  Yellow Pages Income Fund Volume 0 1000000 2000000 3000000 4000000 5000000 6000000 21-Nov 22-Nov 23-Nov 24-Nov 25-Nov 26-Nov 27-Nov 28-Nov 29-Nov 30-Nov
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5 Was it really a surprise? Yellow Pages Income Fund Adjusted Closing Price 13 13.2 13.4 13.6 13.8 14 14.2 14.4 14.6 21-Nov 22-Nov 23-Nov 24-Nov 25-Nov 26-Nov 27-Nov 28-Nov 29-Nov 30-Nov
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6 Semi-strong Form Efficiency § Stock prices reflect all  public  information § Investors trying to find underpriced stocks 
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12 Fin 301 Market efficiency Raising Capital No Right Issue Ulearn

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