This assignment is going to be used by the College of Business to evaluate the writing ability. Please pay special attention to your grammar and sentence structure in addition to the content of your analysis. This short paper should use APA Style Your paper should be at least five pages in length, excluding any title page. Your grade on this assignment will be based on your writing ability and your adherence to APA style. Be sure to fully reference any sources you use in the correct style.
Write approximately five pages outlining your thoughts and beliefs regarding market efficiency and the role of behavioral factors in market reactions. You should discuss the relative efficiency of different market segments as well as different assets (stocks, real estate, etc.) being careful to cover the following topics:
What does it mean for a market to be “efficient?” What does price behavior look like in an efficient market?
How do you explain bubbles and the following market crashes? Is it possible to have a bubble in an efficient market? Support your conclusions.
What lessons can we learn from the historical bubbles you have reviewed?
How can you determine that a bubble exists before a crash actually happens, i.e., is it possible to determine that you are in a bubble when you are in the middle of one?
If you did determine that you were in the middle of a bubble would you be irrational if you continued to invest/speculate?
What role does behavioral bias (human emotions, etc.) play in the market efficiency question?
How do inefficient markets create opportunities for you?
How do economic problems, recessions for example, tend to be self-correcting and what behaviors and pricing patterns do you typically see following a bubble
This topic is open to some opinion and interpretation, within reason, but you must back up your opinions with facts and logic. DO NOT simply answer the “questions” above and think that you have done a professional job covering the topic. Your work needs to flow in an organized manner.