MN1019 – FOUNDATIONS OF FINANCE ESSAY GUIDELINESSolution.pdf
Please read this document also in conjunction with the essay elaborated by a second year student in the past on a similar, though different, topic (Northern Rock - How A System of Financial Growth Brought the Bank to its Knees)
This year, the topic for the essay will be revolving about:
Here are some brief guidelines on the essay topic for the coursework requirement of MN1019.
To address the main topic of the essay it is necessary that you introduce and discuss the three forms, weak, semi-strong and strong, in which the financial literature typically expresses the efficient market hypothesis (EMH). In addition, it is necessary that you dwell into the literature on the empirical tests of the EMH to provide arguments why you think, or you do not think, that these forms of market efficiency actually hold in concrete financial markets.
You are free to focus on a topic that relates to the three forms of market efficiency. You can consider different theoretical arguments, for example, you can start your essay with the arguments we have developed during our lectures, illustrating market efficiency and its connections with information and price predictability. Then, you can also consider how existing literature refers to the empirical tests of the weak, semi-strong and strong forms of market efficiency. To address this part, try to answer the question “Is there any empirical evidence that one or more of these forms are actually violated in the financial market?” You can finally consider possible connections between the EMH and the rational behaviour of investors.
All essays must take into account the following reference structures:
You need to use work from other sources (academic journals, for instance). Please properly reference your use of those sources! This is VERY IMPORTANT. All of your essays will be submitted to the plagiarism checking software “Turn It In”. Your essay is YOUR work. Please peruse the essay “Northern Rock: How A System of Financial Growth Brought the Bank to its Knees” as an essay which gives a good example of the reference use.
Please do not copy and paste when you are using woks from other sources. Please paraphrase and then cite them. Paraphrasing is not only changing wordings but also changing the structure of the sentence. One trick is to re-state the sentence in your words or summarize similar source together and then cite them together. Please also do not overuse direct quote unless it is necessary (e.g. discussing the wording of a definition, showing impact from famous speech, etc.).
Some good references on the efficient market hypothesis (EMH) to start from are the following:
- Bodie, Z., Kane, A., and Marcus, A. J. (2014). Investments, 10th Edition. Mc Graw Hill (Chapters 11-13).
- Hillier, D., Ross, S., Westerfield, R., Jaffe, J., and Jordan, B. (2013). Corporate Finance, 2nd European Edition. McGraw Hill (Chapter 13).
- Fama, E.F. (1965). ‘The behavior of stock market prices’, Journal of Business, 38(1), pp.34-106.
- Fama, E.F. (1970). ‘Efficient capital markets: A review of theory and empirical work’, Journal of Finance, 25(2), pp.383-417.
References used in your essay need to be actively used. Hence, do not list a reference in the reference list without actively using that reference in your text.
When referencing, please use the Author-date (Harvard) style. Citations are listed in alphabetical order by the author’s last name. If there are multiple sources by the same author, then citations are listed in order by the date of publication.
Example of Reference List Using the Harvard Style:
Gitman, L. and Zutter, C. (2015). Principles of Managerial Finance. Pearson Education, 14th Edition.
Sowerbutts, R. and Zimmerman, P. (2016). Market discipline, public disclosure and financial stability. In: The Handbook of Post Crisis Financial Modelling. E. Haven et al. Eds. Palgrave MacMillan.
Goodwin, J. (2009). ‘Whatever happened to the young workers? Change and transformation in 40 years of work’, Journal of Education and Work, 22(5), pp. 417-431.
All essays must contain the following structure: Title, Introduction, Main Body Section(s) and Conclusion.
The essay should have a title of your choice, which refers to the essay topic.
The introduction should be the first section of your essay. It should tell the reader what is expected in your essay and what are the main questions (or problems, ideas, etc.) that you pretend to discuss in your work. It is important to focus on the question that you are addressing and keep it brief. Direct the reader by stating which aspects of the topic you intend to cover and why.
MAIN BODY SECTION(S)
The main body of your essay corresponds to a set of sections with a title of your choice which will offer the answers to the questions that you will be addressing in the essay.
Keep in mind that the main body will support all your argumentation of your essay. It is in the underlying sections of the main body that you will answer your essay questions in a chain of paragraphs that build and present a case. Remember that each paragraph should contain one big idea and should:
Introduce the idea;
Define any concepts (if needed);
Offer an argument;
Offer and discuss evidence;
Make a final point.
When writing the main body, keep in mind that there will be a reader that will be asking:
What is this paragraph about?
What is your argument in relation to the question?
What is your evidence?
What is your final point in relation to the question?
In the end, keep in mind that when you write, you must do it in a clear and simple way, always taking into account that someone else will read your work. The ideas and arguments transmitted in your essay need to be clear and objective.
Please note: you can have as many sections as you want in the main body of the paper. But please do remember that the essential structure of the essay should contain the three forms of market efficiency and the corresponding empirical tests.
Please note: the template essay “Northern Rock: How A System of Financial Growth Brought the Bank to its Knees” was written by a student of the second year, not first year. Hence, you should take it as a good example for writing references and structuring your essay. But, you do not have to refer to it in terms of content and expectations.
Your conclusion should take up where your introduction left off to bring your arguments and ideas in full circle. The conclusion to your essay is the last time you have a chance to impress yourself upon the reader and persuade them of your ideas. It is therefore important to:
Restate Your Main Argument.
Reiterate your main idea with evidence supporting your argument.
Don't just summarize what you’ve written in the main body, use a persuasive tone to argue your thesis.
Link Your Ideas.
This is your chance to link all of your ideas now that you have presented the reader with all the topic information. Don’t add new ideas.
Think about the importance of your findings and if it indicates further investigation.
Limitations and Further Scope.
Mention any limitations you had to apply;
Take into consideration how further scope could introduce different factors;
Note that these are guidelines and, depending on the type of essay, some of these points might not fit the discussions in your work.
WEIGHT AND WORD COUNT
During your essay, pay attention to the following:
The weight of the total essay in your overall mark is 30%
Total word count on the essay is 1500 words (this includes tables but excludes the bibliography)
You do not need to have precisely 1500 words in your essay. However, try to stay within about +/-10% of this word limit.
All essays must obey to the following format:
Layout: A4 portrait orientation.
Font Size: 12pt.
Spaces: type your essay in double space.
The essay has to be written in ENGLISH (either British or American) Avoid:
Grammar errors Spelling errors Discriminatory language
The deadline of this essay will be 3pm, Thursday, March 12, 2020
You will get a guaranteed 20 marks out of 100 marks for your full essay if ALL of the following topics are addressed:
You have listed and made active use within your essay of a minimum of three scholarly references other than the reference mentioned in this brief (avoid using non-academic references, like Investopedia, or Wikipedia).
You correctly introduced the three forms of market efficiency.
You provided evidence and arguments to support the reasons why you think, or do not think, that these forms of efficiency effectively hold in concrete financial markets.
Other considerations for marking:
Essays, which contain ideas of your own, will very often be good essays. A key criterion I look for when assessing your essay is: has the student been thinking about (an) issue(s) he/she is raising in the essay.
Critical writing: Please see https://www2.le.ac.uk/offices/ld/resources/writing/writing-resources/critical-writing for further guidance.
Undergraduate Grade Descriptor
Scholarship: Excellent application of a rigorous and extensive knowledge of subject matter; perceptive; demonstrates a critical appreciation of subject and extensive and detailed critical analysis of the key issues; displays independence of thought and/ or a novel and relevant approach to the subject; reveals both breadth and depth of understanding, showing insight and appreciation of argument.
Independent learning: Work draws on a wide range of relevant literature and is not confined to reading lists, textbooks or lecture notes; arguments are well supported by a variety of means.
Writing skills: Writing skills are excellent; writing is clear and precise; arguments are logical, well-structured and sustained, and demonstrate thorough understanding; conclusions are reasoned and justified by evidence.
Analysis: Work demonstrates a robust approach to analysis that is evident of a deep understanding of relevant concepts, theories, principles and techniques. For quantitative modules analysis is complete and entirely relevant to the problem.
Scholarship: Very good application of a rigorous and extensive knowledge of subject matter; demonstrates a critical appreciation of subject; displays detailed thought and consideration of the subject; reveals very good breadth and depth of understanding.
Independent learning: Work draws on a range of relevant literature and is not confined to reading lists, textbooks or lecture notes.
Writing skills: Writing skills are well-developed; writing is clear and precise; arguments are logical, well-structured and demonstrate thorough understanding; conclusions are justified by evidence.
Analysis: Analytical steps carried out carefully and correctly demonstrating that it is based on a sound understanding. Analysis is relevant to the problem and is complete and is placed in a clear context.
Scholarship: Good, broad-based understanding of subject manner; makes effective use of understanding to provide an informative, balanced argument that is focussed on the topic; reveals some attempt at creative, independent thinking; main points well covered, displaying breadth or depth but not necessarily both; broadly complete and relevant argument;
Independent learning: Sources range beyond textbooks and lecture material and are used effectively to illustrate points and justify arguments.
Writing skills: Arguments are presented logically and coherently within a clear structure and are justified with appropriate supporting evidence; capably written with good use of English throughout; free from major errors; complex ideas are expressed clearly and fluently using specialist technical terminology where appropriate.
Analysis: Some minor slips in the steps of the analysis and some minor gaps in understanding of underlying principles. Analysis is relevant to the problem and mostly complete. A good interpretation which conveys most of its meaning.
Scholarship: Some but limited engagement with, and understanding of, relevant material but may lack focus, organisation, breadth, and/or depth; relatively straightforward ideas are expressed clearly and fluently though there may be little or no attempt to synthesise or evaluate more complex ideas; exhibits limited independent creative thought; adequate analysis but some key points only mentioned in passing; arguments satisfactory but some errors and perhaps lacking completeness and relevance in parts.
Independent learning: Sources may range beyond lecture material and textbooks though effective engagement with and use of the wider literature is limited.
Writing skills: The question is addressed in a reasonably clear, coherent and structured manner but some sections may be poorly written making the essay difficult to follow, obscuring key points or leading to over-generalisation; competently written with a good use of English throughout (few, if any, errors of spelling, grammar and punctuation). Answers that have upper second-class qualities may fall into this category if they are too short, unfinished or badly organised.
Analysis: Minor slips and occasional basic errors in analysis. Underlying principles are mostly understood, but clear gaps are apparent.Analysis falls short of completeness and is a little irrelevant in place but a reasonable interpretation which goes some way to convey its meaning
Scholarship: Minimum acceptable level of understanding; extremely basic and partial understanding of key issues and concepts; some material may be used inappropriately; uninspired and unoriginal; relies on limited knowledge; analysis poor or obscure, superficial or inconsistent in places; arguments incomplete, partly irrelevant or naive.
Independent learning: Sources restricted to core lecture material with no evidence of wider reading.
Writing skills: Though errors may be few and generally insignificant, answer may be poorly focussed on the question, lack rigour and/or consist of a series of repetitive, poorly organised points or unsubstantiated assertions that do not relate well to one another or to the question, although some structure discernible; borderline or poor competence in English (some problems of spelling, punctuation and grammar that occasionally obscures comprehension).
Analysis: Some knowledge of the analysis to be followed, but frequent errors. Some attention paid to underlying principles, but lacking in understandingand frequently irrelevant. Some interpretation is given, but it does not place the analysis in any real context.
Scholarship: Minimum acceptable level of understanding; extremely basic and partial understanding of key issues and concepts; some material may be used inappropriately.
Independent learning: Sources restricted to core lecture material with no evidence of wider reading.
Writing skills: Though errors may be few and generally insignificant, answer may be poorly focused on the question, lack rigor and/or consist of a series of repetitious, poorly organised points or unsubstantiated assertions that do not relate well to one another or to the question; borderline competence in English (some problems of spelling, punctuation and grammar that occasionally obscures comprehension).
Minimum requirements have not been met.
Scholarship: Inadequate knowledge of relevant material; omission of key ideas/material; significant parts may be irrelevant, superficial or factually incorrect; inappropriate use of some material; mere paraphrasing of course texts or lecture notes; key points barely mentioned; very weak grasp or complete misunderstanding of the issues; inclusion of irrelevant material; does not address the topic or question.
Independent learning: Restricted to a basic awareness or no awareness of course material and textbooks; very meagre use of supporting material or unsupported assertions; use of irrelevant or unconvincing material.
Writing skills: Unacceptable use of English (i.e. comprehension obscured by significant and intrusive errors of spelling, punctuation and grammar); poor and unclear, or totally incoherent, structure. Answers that ‘run out of time’ or miss the point of the question may fall into this (or a lower) class.
Analysis: Erroneous analysis with mistakes. Very little attention paid to the underlying principles of the analysis. Far from complete with little relevance to the problem. Limited interpretation that reveals little, if anything, about the meaning
Scholarship: Displays a superficial appreciation of the demands and broad context of the question but is largely irrelevant, fundamentally flawed, or factually incorrect; inappropriate use of material; mere paraphrasing of course texts or lecture notes; key points barely mentioned; complete misunderstanding of the issues; inclusion of irrelevant material.
Independent learning: Restricted to a limited awareness of basic course material; unsupported assertions; use of irrelevant or unconvincing material.
Writing skills: Minimal structure, though may only list key themes or ideas with limited comment or explanation.
Analysis: Analysis has very significant omissions demonstrating little understanding of problem or underlying principles. Analysis may be ill suited to problem. Very little interpretation of meaning of the analysis.
Scholarship: No recognition of the demands or scope of the question and no serious attempt to answer it. Complete misunderstanding of the issues; inclusion of irrelevant material. May have simply failed to address the question/topic set.
Independent learning: No evidence that the most basic course material has been understood; unsupported assertions; use of irrelevant or unconvincing material.
Writing skills: Without structure; comprehension may be completely obscured by poor grammar, spelling, punctuation.
Analysis: Virtually complete failure to carry out analysis. No evidence of understanding of underlying principles and bears no relevance to the problem. No attempt to interpret or explain the meaning of the analysis.
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