My CONCULUSION (Efficient Market Hypothesis)

My CONCULUSION (Efficient Market Hypothesis):

PART: 7 

Rational Expectations Hypothesis which is developed for the money economy is adapted to the financial markets as Efficient Market Hypothesis. According to this hypothesis, expectations in financial markets are equal to optimal estimates with the use of all available information in the market. As a result, according to this hypothesis, the price of an asset reflects all existence information which is related with the value of the asset. Therefore, the expected rate of return which smoothed according to risk will be equal for all beings are asserted. So whenever any one of the beings which has equal risk, provide a higher return, investors go towards to buy these beings.

We see that “it has been proposed to minor companies which have more (high) yield than major companies due to their higher risk basically“in S.BASU researches. For the reason that we can say about a company which try to get more profit, has to be considered the majority or minority. Moreover, in S.BASU research in 1983, it is defined that ‘shares of minor firms provide significantly higher returns than shares of major firms’ so amount of returns the company which is analyzed, is related to their size.

The other point is that Company has to decide how they will use their dividend because we know:

‘-Dividends is paid in cash to partners.

- Profit is never paid to the shareholders, kept in own of Company. Undistributed profits increase the value of the company because either this profit will invest for the projects of the company or it will transform into dividend which will pay to the shareholders in the next terms. ‘

As a result, using of dividend is very important for the companies.