Your friend approaches you to provide advice on the mechanisms within the financial market, how prices are set and the concept of the incorporation of information into prices.(a) With reference to efficient markets provide your friend with a short, 300 word description regarding how prices are set and how this information is incorporated into prices. In addition, what is the implication for finance managers and their decision making process? (6 marks)In the same vein, your friend wishes to know more about the mathematics of returns and has provided the historical prices of Algotech Ltd. She does not understand the difference between arithmetic and geometric returns of a stock or the implications of both of these averages. Your objective is to show her the differences between these. Algotech Ltd. has not paid any dividends in recent history.The following table contains the prices provided by your friend:YearPrice0100111029539041055100(b) Identify the yearly returns for Algotech Ltd. (2 marks)(c) Calculate the arithmetic and geometric average rates of returns.(d) With specific reference to the averages and prices of Algotech Ltd, describe the differences and implications to investors of the two averages
It is our mission to promote academic success by providing students with superior research and writing, produced by exceptional writers and editors.
Our academic writers have all levels of degrees so that we can accommodate all academic levels. If you are a high school student, you will receive a personally assigned writer with at least a Bachelor’s degree in the subject field.
For any questions, feedback, or comments, we have an ethical customer support team that is always waiting on the line for your inquiries.
Phone: +1 (708)-515-4480