The document discusses key aspects of efficient markets including that stock prices reflect all available public and private information, making it impossible to consistently outperform the market. It also notes that market prices are fair, representing the amount assets would trade between knowledgeable parties. Additionally, the document contrasts real assets that produce goods/services with financial assets that are claims on real assets or income from assets, and discusses how globalization has increased funds available for international borrowing while providing more investment opportunities.

3.  Efficient Market ;
 Market Prices are Fair ;
 Investors Have Other Alternatives;
 Firms can’t Regularly Deceive the Market;
 Real Vs Financial Markets;
 International Perspective.

5. Efficient Market :
“An efficient market is a market which incorporates all
currently available information
when determining price”.

6. Efficient Market Hypothesis :
Impossible to ‘beat the market’
Because stock market efficiency causes existing share prices to
always incorporate and reflect all relevant information.

7. Forms Efficient Market :

8. Market prices reflect:
Forms of market efficiency
Past market
data
Public
information
Private
information
Weak form of market efficiency 
Semi-strong form of market
efficiency
 
Strong form of market efficiency   
Forms Efficient Market :

10. Market Prices are Fair:
Market Price: Amount at which an asset would change hands between
two parties, where both have knowledge of the relevant facts. Also referred
to as market price.
This is simply a different way to say that an efficient market
correctly prices assets. The important implication here is that
differences among financing alternatives-from a price
standpoint-are more apparent than real.

12. When the firm’s financial alternatives are being
considered, the firm should Remember that investors
have their own set of alternatives.
Investors will not pay any premiums for financial
securities.
Investors have some alternatives those are:-
1. Stockholders prefer debt financing or equity
financing for wealth maximization.
2. Stockholders prefer generous dividend payouts or lower
Payouts with more reinvestment in the firm.

13. Timing of financing is difficult for the company
for the efficiency of market.
When the firm is trying to decide when to issue
securities, its attempts to predict the best time
to issue often will be frustrated because
nobody knows what will be or not in the future.
When financing time is difficult:-
1. Firms don’t want to issue new bonds when
interest rates are high.
2. Firms don’t like to issue new common shares
when their stock price are lower from the
normal levels.

15. Why

16.  Price of assets are fairly mention or fairly disclosed to the market.
 Relevant information used by the market.
 Strong management.
 managers, auditors catches the cleaver people who committed fraud.
 Documents are fairly presented.

17. Real
Vs
Financial Markets

18. Real versus Financial Assets
• Real Assets
• Used to produce goods and services: Property,
plant & equipment, human capital, etc.
• Financial Assets
• Claims on real assets or claims on asset income
– “Money market” instruments (< 1 year to maturity)
• Bank certificates of deposit, Treasury bill, commercial
paper, etc.
– “Capital market” instruments (1+ year to maturity)
• Stocks, residential mortgages, long-term bonds, consumer
loans, etc.

19. Bank BorrowerLender
Money
Financial
Instrument A:
e.g. Mortgage loan
Financial Instrument B:
e.g. Deposit
Money
Financial instrument A is ‘issued’ by the borrower and is
essentially a claim on borrower’s future income or asset.
Financial instrument B is ‘issued’ by the Bank and is
essentially a claim on Bank’s future income or asset.
After financial instrument A is issued and sold to the Bank,
it becomes a financial asset of the Bank.
After financial instrument B is issued and sold to the lender,
it becomes a financial asset of the lender, the liability of the
Bank.

20. Real versus Financial Assets
• All financial assets (owner of the claim) are
offset by a financial liability (issuer of the
claim).
• When we aggregate over all balance sheets,
only real assets remain.
• Hence the net wealth of an economy is the sum
of its real assets.1

21. International Perspective
Capital Market

22. Globalization in Capital Market 2

24. Attraction of the Global Capital Market?
• Increases the supply of funds available for
borrowing.
• Borrower’s perspective
– Lowers the cost of capital.3
• Investor’s perspective
– Provides a wider range of investment
opportunities.
– Favorable tax status.
– Few disclosure requirements.

26. Effects of International Investment

27. Conclusion
This is all of my presentation. Thank you for
listening me for a long time. If we have made any
mistake, please pardon me. And If you have any
further question on my topics, you can ask me.
Good Bye