Premia in stock markets

Premia in stock markets

Empirical evidence shows the existence of small-large and value-growth premia in stock markets, thus an understanding of these premia in stock markets is a valuable tool for your professional practices in investment. Why is this valuable? As an example, if there is a risk that a mature payment will not be paid, investors tend to demand a higher return. In other words, if there is a high risk of default or a credit event, this will require additional return as compensation. With all this in mind, for this Collaboration you will investigate premia in your own country and discuss the associated risks and returns.

To prepare for this Collaboration:

  • Review your Learning Resources with a focus on premia factors.
  • Research small-large and value-growth premia in stock markets within your country.
  • Reflect on how these factors impact expected returns.

To complete this Collaboration:

By Sunday (Day 4), in a response of approximately 750–1,000 words, address the following issues/questions:

  • Summarise the evidence you found regarding small-large and value-growth premia in stock markets within your country.
  • Analyse how the fundamental risk factors drive expected returns.
  • Based on your analysis, critically evaluate why these premia might exist.

Submit your initial response to the Turnitin link provided and post to the Collaboration forum.

By Wednesday (Day 7), post three to five responses to your colleagues by:

  • Opening a debate about premia in stock markets with which you disagree
  • Offering contributions based upon your prior experience
  • Extending the discussion into new but relevant areas
  • Modelling or promoting critical reflection from what you have read

Your collaborative participation will be assessed in three segments. Following the completion of Week 3, you will receive summative feedback and an initial grade based upon your participation in Weeks 1–3. At the end of the Week 5, you will receive additional summative feedback and a second grade based upon your participation in Weeks 4 and 5. At the end of the module, you will receive further summative feedback and a third grade based upon your participation in Weeks 6–8. These three assessment points will each form 5% of your End of Module grade, with a total of 15% for your participation posts overall.

Please note that you should spread your three to five weekly collaborative participation responses over a minimum of 3 separate days for each week. This will help maximise the value of your collaboration with colleagues and serve to meet the learning objectives for each activity.

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