Market Efficiency

Question 1
The purpose of this assignment is to allow the student an opportunity to explain what it means to have an efficient capital market. Students will gain an understanding of the different levels of market efficiency and how behavioral finance can inhibit reaching market transparency.

Assignment Steps

Resources: Microsoft^® Word

Explain in 525 words what it means to have efficient capital market, including:

• Describe the behavioral challenges in achieving efficiency.
• Discuss the three forms of market efficiency.
• What are the implications to corporate finance?
• Would you consider the real estate market an efficient capital market? Please explain why or why not.

Question 2

1.A local travel agent is advertising an upscale vacation pkg for travel 3 years from now to Antarctica. pkg requires you pay $25,000 today, $30,000 one year from today and final payment of $45,000 on the day you depart 3 yrs from today. what is the cost of this vacation in today’s dollars if the discount rate of 9.75%

2.An Airline pd an annual dividend of $1.42 a share last month. the company is planning on paying $1.50, $1.75 and $1.80 a share over the next 3 years. after that, the dividend will be constant at $2 per share per yr. what is the market price of this stock if the market rate of return is 10.5%?