Answer all questions and all parts.
- Distinguish between different levels of financial market efficiency. Give examples to illustrate your answer.
- With close reference to the efficient market hypothesis (EMH) literature and by using relevant empirical evidence and data, critically assess the” efficiency” of London Stock Exchange (LSE) market in recent years.
(Please see Guidance and Preparation Note below for further information).
Compare and contrast key role and functions of the capital markets with those of the money markets. Critically explain how Quantitative Easing (QE) by the Bank of England in recent years, via open market operations in the money markets, has impacted bond, stock, and housing prices in the capital markets in the UK. Please include recent financial charts and tables to support your analysis.
With close reference to recent movements in UK Pound / US Dollar spot exchange rate, critically discuss main causes of exchange rate volatility in the foreign exchange markets. How might exchange rate volatility impact international trade?
Critically explain what you understand by each one of the following financial terms:
- Asymmetric information
- Moral hazard
- Adverse selection
Give examples in each case to illustrate your answer.
With close reference to these terms, critically discuss why there is a need for regulating financial markets.
Guidance and Preparation Note:
- Overall word limit, excluding tables, charts, and graphs, is between 3000-Max.3500 words.
- Each question should be answered with clear reference and citation to key published academic literature and relevant financial data and evidence.
2.For Q1(b) you need to (1) briefly review key academic literature on EMH and the London Stock Exchange market, and (2) carry out your own financial data analysis based on graphical analysis of movements in daily share prices of ONE listed company of your own choice OR FTSE all- share price index ,over a 90- days period, between 1st February 2021 and 1st February 2022, to arrive at a conclusion. Please include your dataset in an appendix to this assignment.
1.Evidence of background reading and relevance of the material to the question posed.
2.Appropriate use of up-date Harvard referencing system.
3.Depth of analysis based on relevant academic literature, empirical evidence, relevant financial charts, and financial data analysis.
- Appropriate conclusion-based on integration of literature with financial data and analysis.