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Long Term Asset Price Volatility This study investigates long-term asset

This study investigates long-term asset price volatility and associated major market reversals in an effort to determine the causal explanations for such phenomena, wherein the alternative explanations are as follows:

An absence of crucial information that is accessible to investors creates a situation in which rational decision making by investors leads to otherwise unexplainable outcomes (supports the efficient market hypothesis).

Irrational decision-making behaviors on the part of investors lead to long-term volatility in asset pricing and the resulting market reversals (does not support the efficient market hypothesis).

Econometric data analysis procedures were applied in the tests of the hypotheses. The primary procedure applied was the Augmented Dickey-Fuller Test (ADF 2) of stationarity / non-stationarity. The statistical application used in the analyses was EazyReg International.

The findings of Case Study One (Japan) and Case Study Two (United States) likely are more reliable than the findings of Case Study Three (Saudi Arabia) because the stock market asset bubble in Saudi Arabia is still in progress. When this study was initiated, the expectation was that the stock market bubble in Saudi Arabia would quickly end because of the dramatic increase in stock prices. That expectation did not occur.

The findings of both Case Study One and Case Study Two failed to provide support for the efficient market hypothesis as a model within which to explain stock market prices during the price escalation phase of a bubble. The contention that an absence of crucial information that is accessible to investors creates a situation in which rational decision making by investors leads to otherwise unexplainable outcomes (supports the efficient market hypothesis) was rejected.

The findings of both Case Study One and Case Study Two do provide support for a behavioral finance explanation of stock market price behavior duri...

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Long Term Asset Price Volatility This study investigates long-term asset. (1969, December 31). In LotsofEssays.com. Retrieved 05:44, July 04, 2022, from https://www.lotsofessays.com/viewpaper/1705615.html