Interpretation of Dividends

Dividend Yield:

All three organizations declared good amounts of dividends at the end of 2010, 2011 & 2012. So, the investors expected higher price in shares at the beginning of 2011, 2012 and 2013 accordingly. Thus, they expected to make above average profits in an extended period before the price adjusted slowly. If they could, it shows evidence semi strong form EMH & if they couldn’t due to rapid price adjustment, it supports semi strong form EMH.

Confidence Cement:

For Confidence Cement 2010-11, the graph shows that prices were quite stable during December 2010 but after the declaration of dividends, it became a bit volatile in January but never rose than the prices of December. So, the investors couldn’t make above average profits and thus it supports semi strong form EMH.

For Confidence Cement in 2011-12, we find from the graph that share prices are quite stable in December 2011 but at the beginning of January 2012 when dividend is already declared, the share prices began to rise but for a very limited period of time. In the later period of January we see that share prices adjusted very quickly and started to decline which shows that investors could not make abnormal profits for an extended period. This supports the Semi strong form EMH.

But in 2012-13 Confidence Cement’s share prices show an opposite trend. The share prices for the entire month of December 2012 were stable but from the beginning of January 2013 when dividend is already declared, share prices suddenly started to fall up to the half of January. But in the last half of January share prices started rising higher and higher significantly. It shows that investors can gain abnormal returns for a good amount of time but they have to remain patient in the short run. Since abnormal return was possible after the declaration of dividends, this shows evidence against Semi strong form EMH.

Heidelberg Cement:

The graph of Heidelberg Cement of 2010-11 shows that prices were stable during the entire December of 2010 but it rose a bit just before the dividend was declared. The investors might have anticipated higher dividend yield during that period due to price rise. But after the dividend declaration, from the beginning of January the price started to fall and it became volatile in the rest of January. Though price rose and fell some more times then, it never rose above that of December and thus investors failed to make profits at that time. So, it supports the Semi Strong form EMH.

For Heidelberg Cement in 2011-12, we can see that share prices were quite stable in the two months