Market Anomalies

Market Anomalies

1. Name and analyse the market anomalies that you know of.  What makes them anomalies? Who do these anomalies present a challenge to supporters of the Efficient Market Hypothesis (i.e. Rational/Traditional Finance)?

2. What do De Bondt and Thaler investigate and identify as potential explanations for some anomalies, and how do their explanations differ from those of the supporters of the Efficient Market Hypothesis?

Answer preview

It is typically given that there are free lunches and free rides on the wall sheet of business markets. For this reason, with hundred investors persistently on the hunt for a portion of an extra performance, there should be no simple way to beat the market. Alternatively, tradable anomalies seem to persevere in stock market and many of the understandably charm many investors (Singal, 2010). For this discussion, I will dwell on four market anomalies which I have clear information concerning their functions and the reason why they are referred to as anomalies.

These four anomalies include small firm outperform, January effect, low book value, and neglected stocks (Varvouzou, 2013)……………..

WORD COUNT:635WORDS

FORMAT:APA