Assignment- Financial Markets APC 313

OFF- CAMPUS 11TH JANUARY 2019.

LEARNING OUTCOMES

Upon successful completion of this module, students will be

able to:

Knowledge-based outcomes

1. explain the operation of financial markets and understand

their importance.
2. explain key theories and models of financial markets
including the efficient market hypothesis, and understand
key implications.
3. analyse the operations and the efficiency of financial
markets

Skill-based outcomes

4. To identify and collect appropriate financial data and indices

including share prices to carry out analysis of operations and
efficiency of financial markets.

Assessment Criteria

1.Evidence of background reading and relevance of the material

to the question posed.

2.Appropriate use of up-date Harvard referencing system .

3.Depth of analysis based on relevant academic literature ,

empirical evidence , and financial data analysis.

4. Appropriate conclusion based on relevant analysis of data,

academic literature and empirical evidence.
Guidance and Preparation Note:

1. Overall word limit, excluding tables, charts, and graphs, is

between 3000-4000 words.

1. Each question should be answered with close reference to

key published academic literature and relevant financial data
charts and evidence.

2.For Q. 4 you need (1) to carefully review key academic

literature and recent published empirical evidence on EMH
relating to your chosen stock exchange market, and (2) to carry
out your own financial data analysis based on a relevant
graphical analysis of the movements in daily share prices/ or
an all- share price index ,over say a 90- days period, to arrive at
a conclusion.

• THE UNIVERSITY’S REGULATIONS CONCERNING

CHEATING, COLLUSION AND PLAGIARISM APPLY
TO THIS Assessment.

Answer all questions and all parts.

Q.1

Critically explain what you understand by each one of the following

financial terms:

a. Asymmetric information
b. Moral hazard
c. Adverse selection
Give examples to illustrate your answer.

With close reference to these terms, critically discuss why there is a need
for regulating financial markets.
(30 marks)
Q.2

Compare and contrast key role and functions of the capital markets with
those of the money markets Critically explain how money markets’
activities might influence asset prices in the capital markets. Give
examples and include financial charts to illustrate your answer.

(20 marks)

Q.3

(a) Explain the nature of potential risks in international financial

transactions and critically discuss how international traders might manage
such risks in foreign exchange markets.

(10 marks)

(b) Distinguish between the spot and the forward foreign exchange rates
and examines the nature of relationship between these two rates.

(10 marks)

Q.4

With a close reference to efficient market hypothesis theoretical and

empirical literature, critically assess the level of ” efficiency” of an
emerging stock exchange market of your own choice. Your answer
should include a relevant graphical analysis of stock prices that you
should carefully carry out over your chosen sample period.

(30 marks)