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    narmada
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    Capital markets research examines how financial information impacts stock prices. It typically assumes markets are efficient, where all available information is quickly reflected in stock prices. Researchers justify information has 'value' if it leads to price changes. If no price reaction occurs after earnings release, researchers may cite confounding events that obscured the information's effects, or argue smaller entities have less impact. Confounding events represent unrelated occurrences that make the specific information's price effects unclear.

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    Capital markets research examines how financial information impacts stock prices. It typically assumes markets are efficient, where all available information is quickly reflected in stock prices. Researchers justify information has 'value' if it leads to price changes. If no price reaction occurs after earnings release, researchers may cite confounding events that obscured the information's effects, or argue smaller entities have less impact. Confounding events represent unrelated occurrences that make the specific information's price effects unclear.

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    7 views1 page

    Questions CMR

    Uploaded by

    narmada
    Capital markets research examines how financial information impacts stock prices. It typically assumes markets are efficient, where all available information is quickly reflected in stock prices. Researchers justify information has 'value' if it leads to price changes. If no price reaction occurs after earnings release, researchers may cite confounding events that obscured the information's effects, or argue smaller entities have less impact. Confounding events represent unrelated occurrences that make the specific information's price effects unclear.

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    © All Rights Reserved
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    1. What is the role of capital markets research?

    2. What assumptions about market efficiency are typically adopted in capital markets
    research? What do we mean by ‘market efficiency’?
    3. How would a researcher undertaking capital markets research typically justify that a
    particular item of information has ‘value’ to investors?
    4. If an organisation releases its earnings figures for the year and there is no share price
    reaction, how might capital market researchers explain this finding?
    5. What, if any, effect would the size of an entity have on the likelihood that the capital
    market will react to the disclosure of accounting information?
    6. With respect to capital markets research, explain what a potentially confounding event
    represents.

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