Finance Numericals

Efficient Market Hypothesis (EMH):  This theory is developed by economist Eugene Fama in 1960. The efficient market hypothesis states that the price of securities reflected all the information at any point in time. It is impossible to beat the market because all the information are quickly incorporated into the assets so, there is no any new information which helps the investors to earn any gain from market or forecast any price movement in future. In market investors traded securities with same interest and closely analysing the market to earn any gain from price movements but the securities are traded in fair price in market the chances to gain is impossible. Three degree of efficient market hypothesis: ·          Weak form of efficient market hypothesis ·          Semi-strong form of efficient market hypothesis ·          Strong form of efficie...

Capital Market: It is a market where financial instruments are purchased and sold in long term basis like equity, debentures, bonds etc. It provides a place for investors and companies whether they are private or public to transact. It helps the companies to raise capital and the investors to invest their savings for earning dividend and interest. The capital market helps to provide the long term funds through debentures, bonds etc. Capital market is divided into two: Primary market and Secondary market. Primary market is a market where new shares or debentures are issued to the public. In this market the new and fresh funds are raised by companies or government.  Shares or debentures are issued first time in the market for setting up the new companies operation. The capital raised is used for purchasing the fixed assets. Primary market is also known as New Issue market. In secondary market the existing stocks are issued to raise capital by the company whether it is p...