The Emh, the Financial Crisis and the Behavioral Finance

The EMH, the Financial Crisis and the Behavioral Finance 1. Introduction The Efficient Market Hypothesis (EMH) that was first proposed by Fama (1965, 1970) is the cornerstone of the modern financial economic theory. The EMH argues that the market is efficient and asset price reflects all the relevant information concerned about its return. The genius insight provided by the EMH has changed the way we look at the financial crisis thoroughly. However, the confidence in the EMH is eroded by the recent financial crisis. People can not help to ask: if the market is efficient and the price of assets is always correct as suggested by the EMH, why there exists such a great bubble in the financial market during the recent financial crisis?†¦show more content†¦This financial crisis has eroded the confidence in the EMH. The validity of the EMH and the existence of the efficient market are questioned broadly. If asset prices are always correct and reflect all the relevant information concerning about its return just as the EMH has suggested, why there exists such a great bubble in the financial market during the recent financial crisis? If the market is efficient, why the market fails to predict the collapse of Lehman Brothers, Bear Stern and other large financial institutions? Overall, the EMH fails to answer such questions. Moreover, the EMH also performs poor in explaining other financial crisis. One example is the Tulipmania that occurred in the 17th century. The prices of the tulip bulbs reached extremely high level which seriously deviates from its fundamental value that was suggested by the EMH. This apparent bubble is contradicted with the prediction of the EMH. In fact, the explaining power of the EMH becomes pale when confronting financial crisis. The EMH does not assume that investors are rational, but the EMH does assume that the market is efficient. But the reality may not be that simple. Investors may exhibit a lot of irrational behaviors in the real life, such as overconfident in their ability, following others readily, making wrong decisions whenShow MoreRelatedFinance; The Efficient-Market Hypothesis1826 Words   |  7 PagesIntroduction Efficient-market hypothesis In finance, the joint hypothesis trouble, or the efficient-market hypothesis, states that financial markets are informational competent . Besides this, one cannot constantly achieve returns beyond average market income on a risk-adjusted basis, with the information obtainable at the moment the investment is complete. There are three main hypothesis versions: strong, semi-strong, and weak. The EMH weak form claims that rates on traded assets (e.g.,Read MoreRegulation Of The Us Banking Industry1578 Words   |  7 Pagestests to measure possible loss. Banks also provide services to consumers, institutions, and globally. Ensuring that banks are reliable and have the capital funds to maintain their status is highly important. It supports business and creates loans to finance new companies as well. In general it is healthier than before, other banking regulations include Dodd-Frank Act, Glass-Stegall Act, Gramm-Leach-Biley Act. The Dodd-Frank Act is very important to prevent banks failing like the fall of 2008 when theRead MoreBenefits Of Barclays Bank : Viewing Principles Of Finance At Work2258 Words   |  10 PagesBarclays Bank: Viewing Principles of Finance at Work Introduction Banking success is all about sustained profitability through the application of robust scientific investments and trading strategies. The premier position that Barclays enjoyed in the financial industry for over 3 centuries is a validation of the fact that it was built on the strong principles of finance. However, the last couple of decades have seen erosion in its reputation due to the breaching of those very principles. BarclaysRead MoreStock Market Bubble and Herding3002 Words   |  13 PagesHerding is an everyday phenomenon from personal to financial contexts. The focus of this paper is to explore the theory of herding, namely Compensation Based Herding (CBH) and its effect on financial markets. The report aims to explain herding, assess the advantages and disadvantages of CBH incorporating the 2008 financial crisis, and explore the possibility that CBH may have no effect on the financial markets. Herding occurs when investors imitate each other and create a bandwagon effect. ThereRead MoreFinancial Analysis : Barclays Bank2411 Words   |  10 Pagesinterest rate cycle: if rates are rising they have to ensure that their lending rates rise alongside or before the borrowing rate and vice versa. The premier position that Barclays enjoyed in the financial industry for over 3 centuries is a validation of the fact that it was built on the strong principles of finance. However, the last couple of decades have seen erosion in its reputation due to the breaching of those very principles. Barclays Bank is one of the biggest British multi-national banks headquarteredRead MoreThe Consequences Of Herding Behavior Of Financial Traders1766 Words   |  8 PagesAbstract: This report sets out to analyze the causes and the consequences of herding behavior of financial traders, emphasizing the impact on financial markets’ efficiency and stability. Moreover, it contributes to formalize the role of policy makers, how they react to herding behavior and what measures they can take to curtail it. This paper is divided into three section: Section 1 introduces herding behavior; Section 2 analyzes origin and consequences of herding and its repercussion on EfficientRead MoreStudy of Seasonality in the Indian Stock Market21577 Words   |  87 Pages| FINANCE TESTING SEASONALITY IN THE INDIAN STOCK MARKET A Project Report submitted in partial fulfillment of the requirements for the Degree of Master of Business Administration Under the guidance of: Dr. S.K. Tuteja Submitted by: Sachin Garg F-045, MBA(FT) 2011-13 Faculty of Management Studies University of Delhi Delhi – 110007 CERTIFICATE This is to certify that this project report titled â€Å"Testing Seasonality in the Indian Stock Market†, submitted in partial fulfilmentRead MoreDfa Case Study2947 Words   |  12 Pagesargue that cyclical circumstances can clarify these changes in the value premium[7], but if you take another look at the graph it is hard to defend this explanation since the value premium was negative and didn’t go up during the most recent â€Å"financial crisis†. Despite the changing value premium most researchers conclude that the value premium does exist. Several â€Å"causes† of the value premium have been given. As said before, Fama and French argue that value stocks earn a higher return just becauseRead MoreA Comparison of 1929s Stock Market Crash and Todays Financial Crisis3007 Words   |  13 Pagesrecent financial crisis was an all encompassing meltdown that affected the entire global economy. It is nearly impossible to quantify the distress this crisis put on the American economy and the world has yet to see the long term damage.   After any disaster, people are eager to point fingers. This financial meltdown was no different, as critics were quick to blame anything and anyone from Wall Street to fair value accounting.   It’s hard to pinpoint exactly what caused the most recent financial crisisRead MoreSelected Topics24764 Words   |  100 Pagesmillion BTUs. PART 2: Selected Research Topics for Master Thesis Topic 1: Financial crises Title: Financial Crises in X economy: Evidence from a probit model 1970-1999 Aim: This study empirically investigates the determinants of financial crisis (or currency crisis), which occurred in X economy in 1991, 1994 and the late 1997. We conduct a probit model as the main tool to identify the leading indicators of financial crisis using a sample of annual data covering the period 1970-1999. Methodology:

The Effects Of Emotional Intelligence On Leadership

Emotional Intelligence Displayed by Different Leaders As election time is quickly approaching, people often continue to question the nature of leadership. Many people tend to focus on multiple characteristics as attributing to the overall effectiveness of a leader. Previous research has gone on to suggest that leaders must employ emotional intelligence in order to be effective(in text citation). Emotional intelligence consists of five components those of which include self-awareness, self-regulation, motivation, empathy and social skill. Though it is important to note that different leaders are better suited for different situations, each leader must maintain all of the components of emotional intelligence in order to be effective in all situations. In an effort to identify effective leaders, and what exactly is meant by â€Å"effective†, I conducted an interview with two women in leadership roles. Since one woman runs a business and the other woman runs a non-profit organization, I set out to determine through each interview if they both employ any components of emotional intelligence. Method Participants Two female leaders were interviewed for this assignment. One leader is in the business world, while the other is head of a non-profit organization. The first leader is 58 years old and has owned Anna D’s Cafe Ice Cream for 8 years. At her Cafà ©, she currently has 30 part-time employees. The second leader is 65 years old and has run the Woonsocket Cat SanctuaryShow MoreRelatedEffects of Emotional Intelligence on Leadership3159 Words   |  13 PagesThe Effects of Emotional Intelligence on Leadership Eric Rowen Chicago School of Professional Psychology Abstract This paper will encompass a discussion about emotional intelligence (E.I.), its varied definitions, applications to leadership, and potential areas of concern. It begins by outlining the ability-based model of E.I. set forth by Mayer, Caruso, and Salovey and their Multifactor Emotional Intelligence Scale. Next, the mixed and trait-based constructs of emotional intelligence areRead MoreThe Effects Of Emotional Intelligence On An Individuals Leadership Abilities1338 Words   |  6 Pagesexamined how emotional intelligence or EI plays a role in an individuals’ leadership abilities (e.g. Neck, Manz, Houghton, 2017; Houghton, Wu, Godwin, Neck, Manz, 2011; Goleman, 2004). Understanding emotional intelligence is important because it helps leaders understand their values and goals (Goleman, 2004 p. 2); furthermore, it helps individuals understand or regulate other persons emotional as well (Neck, et al., 2017 p. 145). Emotional intelligence has become such a staple in leadership that psychologistRead MoreHow Leadership Styles Influence On An Organization s Climate Essay1019 Words   |  5 Pages The article of Leadership That Gets Results provides the six leadership styles for individuals to understand how leadership styles influence on an organization’s climate. Furthermore, the six leadership styles are consisted of the emotional intelligence: self-awareness, self-management, social awareness, and social skill. Therefore, these three concepts, such as the six leadership styles, the elements of emotional intelligence, and an organization’s climate, will influence each other because theRead MoreLeadership Style And Emotional Intelligence1734 Words   |  7 PagesLeadership Style and Emotional Intelligence Many organizations and groups are established each day, but only a few realize their dreams. Although many factors are responsible for the differences in success and failure of organizations, leadership is a prime factor. Leaders play a significant role in determining the success or failure of an organization. Management studies have attempted to understand leadership including defining the skills that a leader requires to become successful. EmotionalRead MoreEmotional Intelligence And Its Effect On The Job Satisfaction Of Employees Essay1645 Words   |  7 PagesEmotional intelligence relates to an individual’s ability to manage their emotions, and is shown to have positive outcomes for an organisation. Manager emotional intelligence is thought to have an effect on the job satisfaction of employees, which could be due to behaviour or leadership styles. It is inconclusive which of these reasons, if any, are the cause of the positive correlation due to the lack of overwhelm ing support for any one cause and the biases of the studies. Emotional intelligenceRead MoreEmotional Inelligence Essay examples1669 Words   |  7 Pagesyears emotional intelligence has become one of the hottest topics between organizations. Researches have been working on this topic for time to time, to demonstrate or refute the importance of feelings. In the beginning common thoughts from managers and or supervisors were; emotions are in the way; emotions try to keep us from making good decisions; emotions increase a lack on focusing. Fortunately, an indeed research takes emotional intelligence to an ultimate ideal in which intelligence is basedRead MoreRelationship Between Emotional Intelligence And Transformational Leadership Essay1514 Words   |  7 Pages(2003), the relationship between emotional intelligence (EI) and transformational leadership style was examined in order to determine whether EI scores could be used to predict transformational leadership style. In addition, gender differences in the relationship between EI and transf ormational leadership were examined to determine if there is a significant interaction of gender and emotional intelligence. This research is important, because transformational leadership has been found to be the mostRead MoreNotes On The Optimism Leaders And The Glass Is Half Full 1579 Words   |  7 Pagesis lacking the foundational skill of emotional intelligence which hinders the other competencies as well. More so, he has been passed over several times for advancement, hence, â€Å"self-awareness is so important for job performance that 83 percent of people high in self-awareness are top performs† (Bradberry Greaves, 2009, p. 26). Apparently, others notice his shortcomings in emotional self-awareness, accurate self-awareness, and self-confidence. Emotional self-awareness. Leaders, who are inRead MoreOrganizational and Professional Development1519 Words   |  6 PagesIntroduction Social intelligence has been defined as the ability to understand and manage other people, and to engage in adaptive social interactions like making them to get along with you. Social intelligence entails a persons awareness to a situation and the social dynamics that accompany the situation and the knowledge of the strategies and interaction style, that, he/she can use to achieve the desired objective while dealing with others (Bob, 2008). Social intelligence has gained popularityRead MoreLeadership And Emotional Intelligence : An Effective Leader1390 Words   |  6 PagesLeadership and Emotional Intelligence: An effective leader is defined as a person who is followed by the others, in other words â€Å"leadership is a process of influencing others to achieve organizational goals, creating a vision for others and having the power to translate the vision into realism.† Leadership is a skill in which the leader tries to modify and shape the behavior of others. It has been understood throughout the history and culture that people had been looking towards leaders for assurance

Flower and Delicious Sunflower Bread Free Essays

The sunflower family (Helianthus) has perfect flowers, with male and female organs both on the same flower, but with either the male or the female organ infertile. What is usually called the flower is actually a composite flower, made up of numerous flowers or florets crowded together. Once the plant has flowered, usually in summer, it produces a sweet pollen mixture that lures bees and other insects. We will write a custom essay sample on Flower and Delicious Sunflower Bread or any similar topic only for you Order Now When the bees arrive, they get their feet wet with the pollen as they drink the plant’s nectar. The plant relies on the sperm-producing pollen coming into contact with the egg-containing stigma. The yellow pollen is transferred from the insect’s hairy legs to the stigma. This is the first step in sunflower reproduction. Once the pollen goes down the stigma, it releases sperm into the ovary. An available egg receives the sperm, and the egg is fertilized with a meat-bearing seed. The pollen/sperm can belong to the original plant or may come from another sunflower. Self-pollination is a mechanism that the sunflower uses to stay alive. On the occasion where the stigma receives no pollen, the stigma will twist and wrap itself around its own pollen. Seeds created by self-pollination will only produce flowers that look like the original plant, so no hybridization will have occurred. Sunflowers are fast reproducers, and one plant can create dozens of others. Plant seeds about an 1 inch below the ground. Germination occurs quickly, usually between 5 and 10 days, but spring crops produce more plants than summer crops. Spring crops are planted in April and May. Summer crops go in the ground in June and July. When the back of the plant’s head turns brown, it is ready for harvesting. The Sunflower’s symbiotic relationships with other plants usually benefit the Sunflower, because the sunflower takes all the nutrients and water from the soil for itself and takes over (hence, its invasive). The Sunflower’s relationships with bees and birds and humans is much less greedy, however. The huge face of the Sunflower feeds many bees with its sweet pollen, baseball players and birds feed off of its multitudes of plump, ripe seeds. The Sunflower was first cultivated in mesoamerica (present day Mexico) in 2600 BC (A Gardeners Guide, 1996) and there is evidence that it was being used by the Native Americans in the Mississippi valley in around the same time. It is widely believed that Sunflowers were cultivated for religious purposes having to do with various tribal sun deities. They also used the oil for religious rituals having to do with warfare, bread, medical ointments, dyes and body paints. When Francisco Pizzaro ravaged and plundered the welcoming tribes of Peru, he came across gold paintings and idols of Sunflowers, which he stole and brought back to europe in the 16th century. The Europeans have been growing sunflowers since then, mostly in Holland, Germany, and France. Sunflowers are cultivated nowadays to make Sunflower butter (a peanut butter alternative), and it is mixed with rye to make a delicious Sunflower bread, bird food, salad mixings, etc. The Sunflower oil, which is taken from the ripe seeds is used commonly for cooking and also used as a cheaper biodiesel. Sunflowers also produce latex How to cite Flower and Delicious Sunflower Bread, Papers

Gatsby And Don Quixote free essay sample

# 8220 ; Romantic Fools # 8221 ; By Mike Tardiff Essay, Research Paper Jay Gatsby from Fitzgerald # 8217 ; s The Great Gatsby and Don Quixote from Cervantes # 8217 ; Don Quixote de la Mancha were two rather disillusioned work forces. They were both perplexed in a self-constructed universe of gallantry and phantasy jumping into world. Don Quixote was a dreamer, one who beyond all enjoyed a good escapade. Jay Gatsby was besides a dreamer who believed that he could # 8220 ; Repeat the past, of class # 8221 ; ( 111 ) . Jointly they were excessively pre-occupied with their ain antic image to penetrate world. Following insanity from misreading narratives of gallantry, Don Quixote abandons his place to seek for escapade on the main roads and in the rural landscape of imperial Spain. Don Quixote leaves his little small town in La Mancha to sail to the woods of the Sierra Morena, and so returns to his small town where he recuperates from exhaustion and assorted and assorted hurts. We will write a custom essay sample on Gatsby And Don Quixote or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page He encounters other characters at wayside hostel, which in his lunacy he believes to be palaces. His end is to compensate all manners of wrongs and to derive celebrity for his valiant workss. Don Quixote lived in a clip much more current than his phantasy. He believed that all of his workss were dedicated to a miss whom he gave the name Dulcinea. Quixote was under the influence that Dulcinea was his maiden and that he was a knight combat for her award. In world Aldonza Lorenzo, the adult female he referred to as Dulcinea, wanted nil to make with this countrified and baffled adult male. He was a really baronial and romantic hero in the facet that embarked on a ocean trip in the name of his demoiselle. The ocean trip was ineffectual yet the intent was, in his head, really heroic. What makes him really baronial is the fact that he was devoted to giving her pride and award at any cost, but what makes him tragic is that the workss he performed were adrift and embarrassing. Jay Gatsby was, like Quixote, a tragic yet romantic sap. He devoted his life to the chase of a miss. He one time had a romantic relationship with Daisy Faye when he was James Gatz, an unfortunate adult male. He fell in love with a miss tungsten Ho was in love with money, an component that Jay Gatz did non possess. She so walked out of his life. Gatz so did whatever he could to derive Daisy’s love, which fundamentally meant that he pursued what Daisy loved, money. He eventually became a affluent adult male and one time once more caught the oculus of Daisy. He changed his name to Jay Gatsby. It was about as if he were reincarnated into the adult male that he ever wanted to be. The quandary with this newfound love was that Daisy was already married to one of the most esteemed work forces on Long Island, Tom Buchanon. Gatsby so became a sap in his effort to rekindle the fire between himself and Daisy. He attempted to hold an matter with her buttocks Tom’s back, in hopes that it would bloom into a relationship so to marriage. The calamity occurred when Daisy came to the realisation that she wanted nil to make with Gatsby because she was secure with her current hubby, Tom. Gatsby so passed off and Daisy didn’ t even bother to pay understanding or regard to the adult male she one time loved. Jay Gatsby was a baronial sap. Everything he stood for, and everything he had accomplished, was for Daisy. He was a sap in the mode that he believed he could take her off from her newfound hubby. This led to his death. Gatsby â€Å"had broken up like glass against Tom’s difficult malice.† ( 148 ) . Gatsby and Quixote likewise were both baronial and romantic saps. They both aimed at delighting the 1s that they gave they hearts to. They were both lost within their ain kingdom of false imagination and readings. The reader learns to experience compassion for these characters who are populating their phantasies, nevertheless, can anticipate them to come to footings with world and be overwhelmed with the impression that one can non woolgather everlastingly. Don Quixote and Jay Gatsby were dreamers, and they would allow nil halt them from carry throughing their ends. They were baronial, for, they did non harm anyone in their tests, and they were romantic because they did these workss all in chase of love and felicity. These two characters were human, and all worlds have mistakes. Theirs were simply exploited in a tragic mode.