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Investing and Financial Markets

Why are the financial markets important to the health of the economy?

Why are the financial markets important to the health of the economy?
1. A minimum of One page is required. Make sure you use correct grammar and punctuation.
2. Follow APA style of writing
3. List references in line of APA style of references.

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Investing and Financial Markets

I also have a video exxample of what the powerpoint should look like.

The company I selected was Google. All the information and instructions are below. It just has to be atleast 18pg that include all of the ratios. I attached an example of how the written portion is supposed to look. In addition to the paper you must make a power point that consolidates all of the informant from the paper. I also have a video exxample of what the powerpoint should look like.

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Investing and Financial Markets

Al hanbali, a., saleh, h., & ullah, n. (2022).

Each reply must be 275–500 words and
include at least two scholarly citations in current APA format.
DB#1 LONNIE KING
Discussion: Efficient Market Hypothesis
The efficient market hypothesis is an economic concept that has been researched extensively and consists of three different versions: weak, semi-strong, and strong. Efficient market hypothesis suggests “that the stock price is the reflection of the information available in the market” (Kumar et al., 2020). Unfortunately, information leading the market does not mean that it is accurate information. An idea associated with efficient market hypothesis is known as the “random walk” idea. Random walk means “if the flow of information is unimpeded, and information is immediately reflected in stock prices, then tomorrow’s price change will reflect only tomorrow’s news and will be independent of the price changes today” (Malkiel, 2003). Many investors contend that the stock market can be somewhat predictable at times making it easy to grow money. This goes against Fama’s efficient market hypothesis. The article, The Efficient Market Hypothesis, the Financial Analysts Journal, and the Professional Status of Investment Management explains that “investment management involved some measure of skill, but the necessary skill was minimal and easy to acquire. The efficient market hypothesis (EMH) that developed from Fama’s work for the first time challenged that presumption” (Brown, 2020).
Throughout research of the Efficient Market Hypothesis, I have found that there are many differences when it comes to those who refute and those who support the efficient market hypothesis. “According to the efficient market hypothesis, there is no room for excess returns, although later on, different anomalies are found and investors gain excess returns even with the existence of the efficient market hypothesis” (Ying et al., 2019). With the ability to earn a large sum of money in a short period of time, people tend to spend money rapidly. Learning about the hypothesis theory and how it pertains to the stock market does help investors understand how risky it can be. “Whoever loves money never has enough; whoever loves wealth is never satisfied with their income. This too is meaningless” (Ecclesiastes 5:10, NIV). With the use of the market hypothesis, investors can repeatedly earn large sums of money over time. The success of gaining a large cash payout many times will ignite investors to invest again and again. Therefore, bringing life to the scripture found in Ecclesiastes that putting the love of money before God is meaningless. If we are content and wise with our investments as well as careful with our spending, the money we earn can last a much longer time.
In conclusion, using the efficient market hypothesis theory has the potential for an individual to collect a large sum of money by playing the stock market. It can also leave the investor with nothing. Christians investing their money wisely, while keeping an eye on the market, could result in higher earnings that can be used for the glory of God. At the same time Christians should take heed and not get caught up in allowing money to become their god.
References
Al Hanbali, A., Saleh, H., & Ullah, N. (2022). Two‐Threshold control limit policy in condition‐based maintenance. Quality and Reliability Engineering International, 38(4), 2170–2187. https://doi.org/10.1002/qre.3069 (Links to an external site.)
Brown, S. J. (2020). The efficient market hypothesis, the financial analysts journal, and the professional status of Investment Management. Financial Analysts Journal, 76(2), 5–14. https://doi.org/10.1080/0015198x.2020.1734375 (Links to an external site.)
Malkiel, B. G. (2003). The efficient market hypothesis and its critics. Journal of Economic Perspectives, 17(1), 59–82. https://doi.org/10.1257/089533003321164958 (Links to an external site.)
New International Version (NIV) – Version Information – Biblegateway.com, https://www.biblegateway.com/versions/New-International-Version-NIV-Bible/ (Links to an external site.).
Ying, Q., Yousaf, T., Ain, Q. ul, Akhtar, Y., & Rasheed, M. S. (2019). Stock investment and excess returns: A critical review in the light of the efficient market hypothesis. Journal of Risk and Financial Management, 12(2), 97. https://doi.org/10.3390/jrfm12020097 (Links to an external site.)

Categories
Investing and Financial Markets

Remember what we talked about in class.

BUS327 Investments
Walmart 2010
Write Up Suggestions For Case Report Submission
Case studies are in interesting learning tool connecting theory with practical application.
Solutions are often never the obvious. This case is more straight forward. Your role here is to
assist Sabrina Gupta, an investment advisor, in assessing the valuation of Wal-Mart stock.
SHOULD SHE RECOMMEND THE PURCHASE OF THE STOCK?
Your report should be broken down into the following sections:
I. Executive summary
a. What is you assessment of valuation and what is you recommendation?
b. Highlight the key reason(s) for you conclusion.
c. Which valuation approach do you think gives you the most confidence in your
assessment?
II. First focus on the calculation of the discount rate using the CAPM approach.
a. The case gives you data for the variable in the CAPM model.
i. What is the rationale for your conclusion on each of the variables?
1. Risk free rate – why that number and what if it is higher or lower.
How much does that matter.
2. Market risk Premium – again explain why and assess if the
variance matters?
3. Beta – again explain why and assess if the variance matters?
ii. The “Valuation Multiples” reading will be very helpful to you here.
III. Now turn to the Gordon Growth Model – The perpetual dividends approach.
a. Use the GGM excel model to facilitate you calculations and to make comparisons
in the output as you compare and contrast. Find a professional way to share
your data on this work.
i. What Is the anticipated Dividend?
ii. Apply the CAPM calculation for K here.
iii. What will you assume as the perpetual growth rate. What if you solved
for the perpetual growth rate using today’s price? Do you agree with the
implied growth rate?
iv.
IV. Another approach is to estimate dividends for a few years into the future
and then assume that the stock can be sold at the end of that time. The case
provides some assumptions here.
2
i. Assume a future price as guided by the case.
ii. Assume your discount rate is the same as in your CAPM
iii. How valid or not is this approach? Explain.
iv.
V. Lastly, using the 3-stage DDM approach, justify your changes, if any, to what was
provided in the case.
a. Key inputs:
i. Cost of equity
ii. Growth years
iii. Transition years
iv. Initial growth in EPS
v. Payout at maturity
vi. Current year dividend
vii. Current year EPS
A key to understanding valuation is to appreciate how the various models and tools work. Each
are mostly based on the time value of money but are driven by a near term assessment of the
most likely cash flow from the investment (dividends + capital appreciation); an assessment of
sustainable growth; and lastly, a presumed discount rate based on the unique risk profile of
that investment.
Remember what we talked about in class. Valuation measurement is part art and part science.
Value is driven mostly by 2 main factors: growth and the discount rate. These factors are built
on expectations and expectations can change very quickly based on economic (macro) factors
and firm specific factors. Just remember that nothing ever stays the same and nothing lasts
forever.