Assignment- APC 313 Financial Markets

Q.1

Critically explain what you understand by each one of the following financial terms:

1. Asymmetric information
2. Moral hazard
3. 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 characteristics of the money markets with those of the capital markets. Critically explain how Quantitive – Easing (QE) operations in the money markets might influence bond prices, bond yield, and stock prices in the capital markets. Include financial charts to illustrate your answer.

(30 marks)

Q.3

1. Distinguish between different levels of market efficiency. Give examples to illustrate your answer.                               (10 marks)

1. with close reference to the efficient market hypothesis literature, use a graphical analysis of stock prices and daily stock returns, for a selected 90- day period, between December 2019- January2021, to critically assess the” efficiency” of a stock exchange market of your own choice. Explain the implications of your results.

(30 marks)