AFM121 Lecture Notes - Lecture 13: Elliott Wave Principle, Competitive Advantage, Dividend Discount Model
13 Oct 2017
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Q: what are the most two important factors affecting the value of a security: expected profitability. Both styles incorporate qualitative (interpretation) and quantitative (statistics) aspects. Efficient market hypothesis (emh: emh argues that all available information is used to determine current prices. Afm 121: winter 2017: suggests that in efficient markets, prices will follow a random walk where prices change randomly in response to new information, which by nature is unpredictable. In other words, there should be no persisting patterns in asset returns. Emh is currently under attack by behavioural finance and economics: emotional biases (e. g. humanity) leads to systematic errors. Combines different types of data to estimate the value of an asset (shares, bonds, factories, land, etc. : microeconomics, company (financial statements) Industry: may be considered top-down, macroeconomic indicators are predominant (gdp, interest rates, economy-wide inputs, may be considered bottom-up, more importance on company specific factors (financial statements, macroeconomic analysis.
