Question

2 (b) Assess what insights on market efficiency are provided by the performance of ‘glamour’ and ‘value’ portfolios. (230 words)

Answer 1

Value portfolio means all the portfolio which are trying to capitalise upon the difference in the price in the value and these type of portfolio will not be available in the efficient and semi Efficient form of market hypothesis because there cannot make excess return based upon discrepancy on price and value because all the information have already been discounted.

value portfolio can only be utilised through weak form of market efficiency when there is a scope for the fundamental analysis and current prices and not the reflection of future prices.

glamour portfolio is a combination of high growth stocks which are in demand and they are having consistent improvement and this type of portfolio will also not be advocated for strong form of market and semi-strong form of market because all the publicly available information and the privately valuable information have already been discounted into the stock price into these markets. where as weak form of market efficiency, these informations have not been properly reflected into the prices so there is a scope for gaining through detection of the trend hence it can be said that these analysis will be helping in weak form of market efficiency