Economic for Managers Essay Example | Topics and Well Written Essays - 2500 words

Economic for Managers - Essay ExampleThe failure in major financial grocerys exists because of any of these conditions.Prior to the financial crisis, the financial markets such as mental strains, bonds and mutual funds markets are considered markets where the invisible hand operates. The stock market has always been referred to as an good market by economists. According to Brealey, Myers and Marcus, the competition in this market to find misvalued stocks is intense. So when new training comes out, investors rush to take advantage of it and thereby eliminate any advance opportunities (2004, 165).An efficient market, according to Samuelson and Nordhaus in their book Economics is defined as one where all new information is quickly understood by market participants and becomes immediately incorporated into the market prices (2004, 534). This characteristic of the stock market as an efficient market is attributed to the availability of timely information which is incorporated in the prices of the stocks.The stock market indeed needs investors who believe that the market is inefficient in order to make the market efficient. As investors think that there is a authentic degree of inefficiency in the market, these investors notion of the stock prices are that they are underpriced, and there is a chance to profit from this situation.Therefore, as investors believe in this inefficiency, and the possible reciprocate of profiting from these undervalued stocks, they are driven to action. When investors are driven to action, they look for more sources of information, analyze the information and push the prices up or down depending on the value of the information as regards the certain stock. When investors are prompted to take action either by driving the prices of the stocks up or down depending on the information, the direction of the prices tend to be that which incorporates the value of the informationthus, eliminating the possible profits from buying