UGBA 103 Lecture 17 - 1 class #17 page 1 Market Efficiency...

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Unformatted text preview: 1 class #17 page 1 Market Efficiency and Financing class #17 class #17 page 2 Takeovers A takeover is when one company (or person) tries to buy all the shares of another company. Actually, one needs only to buy 50.0001% in order to have a majority voting position. In reality, one needs only to buy ~30% to have effective control of the company (other shareholders will go along with you.) class #17 page 3 Takeovers (2) Here is a graph of average share prices before and after a takeover { fig 13.5, p. 260} Does this graph support or go against the efficient markets hypothesis ? If so, which form ?-16-11-6-1 4 9 14 19 24 29 34 39 Days Relative to annoncement date Cumulative Abnormal Return (%) Announcement Date class #17 page 4 Fund managers The performance of mutual fund managers is an interesting way to look at stock market efficiency. What if I told you that, on average, only 33% of the mutual fund managers beat the market in a given year. This means that 67% DO NOT beat the market Is this efficient ? Are mutual fund managers stupid ?...
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This note was uploaded on 12/06/2011 for the course UGBA 103 taught by Professor Berk during the Fall '07 term at University of California, Berkeley.

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UGBA 103 Lecture 17 - 1 class #17 page 1 Market Efficiency...

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