Question

Explain the concept of efficient market hypothesis and discuss the practical implication with respect to the Ghana Stock Exchange
Maximum page(5 minus references) Minimum pages(3 minus references)

Answer 1

The Efficient Market Hypothesis reflects the share prices reflective trends to explain the investment patterns in an economy, and with the constant developing trend, the overall economic development of the economy is adjudged. In the case of the Ghana Stock, the efficient market hypothesis was used from 2007 to 2012, in the period of which, some of the exiting trends were received which exhibited the share and stock market trend of the Ghana Stock Exchange (GSE). The Random Walk hypothesis was used to analyze the clustering volatility which proved that the Ghana Stock was inefficient in dealing with most of the market turnouts. Some tests pertaining to those trends further revealed that the Ghana Stock Exchange was not compliant of the normal distribution system. All the testes which were done further pointed out that the cost of transaction must be substantially curtailed in order to standardize the activities in the country and to see an improvement in the Ghana Stock Exchange. It was   also seen that very less firms were listed on the Ghana Stock exchange. Therefore a recommendation was made to the concerned officials that in order to make the trend setting of the stock exchange more realistic and plausible, more and more firms should be listed in the Stock exchange so that their trends can successfully monitored.