Analyse the usefulness and possible applications of the EMH in the provision of investment advice

Question 1 (90 marks | Word limit: 1200 words)

Read two (2) or more of the articles listed below and answer the following two (2) questions:

(a) Evaluate the empirical evidence and arguments for and against the efficient market hypothesis (EMH), drawing on your knowledge, independent research, the theoretical perspectives and evidence presented in two (2) or more of the articles. (50 marks)

(b) Analyse the usefulness and possible applications of the EMH in the provision of investment advice, taking into account the evidence presented in two (2) or more of the articles. (40 marks)

Articles on EMH

The following articles are available in the databases in the Kaplan Library in KapLearn. The relevant database is specified in the reference.

• Easton, S & Kerin, P 2010, ‘Market efficiency and the global financial crisis’, The Australian Economic Review, vol. 43, no. 4, pp. 464–468, viewed 12 July 2019, EBSCOhost database available within the OpenAthens portal in the Kaplan Library.

• Holton, L 2009, ‘Is Markowitz wrong? Market turmoil fuels non-traditional approaches to managing investment risk’, Journal of Financial Planning, vol. 22, no. 1, January, pp. 20–29,, viewed 12 July 2019, EBSCOhost database available within the OpenAthens portal in the Kaplan Library.

• Livanas, J 2006, ‘How can the market be efficient if investors are not rational?’, JASSA, issue 2, winter, pp. 24–28, viewed 12 July 2019, ProQuest database available within the OpenAthens portal in the Kaplan Library.

• Malkiel, BG 2003, ‘The efficient market hypothesis and its critics’, Journal of Economic Perspectives, vol. 17, no. 1, winter, pp 59–82, viewed 12 July 2019, EBSCOhost database available within the OpenAthens portal in the Kaplan Library.