Describe conflicts between Firms and Financial Markets

Define market efficiency; describe the 3 forms of market efficiency.

Answer to the question: Are Markets Short term?

Describe conflicts between Firms and Society

Solutions

Expert Solution

Firms and financial market will often be having conflict as financial markets will be wanting the firm to make more disclosure and it will also want the firm to work in the best interest of its shareholders. It will often be adjudging the the ability of the firm to repay the debt and it will be trying to ascertain the creditworthiness of the firm from a different perspective and financial market will also be installing the buy and the sell signal to the firm along with the credit rating to various instrument of the firm so it will be leading to a conflict if the ratings as well as analyst report along with buy and sell are all on the negative side for the company.

2. Market efficiency means all such publicly and privately available information have already been discounted into the stock price and there is no scope for making any additional rate of return.

strong form of market efficiency will be having all such publicly and privately available information discounted in their price whereas semi-efficient form of market efficiency will have only publicly information discounted in their price and not the private information whereas the weak form of market efficiency will be only reflecting the historical price and the past movements and there would not be any possible production regarding future price

Markets are always long term and firms will not be fulfilling the corporate social responsibility so there will be a conflict with the society

jeff jeffy answered 1 year ago

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