Table of contentsThe Titanic: a test of the efficiency of the American financial marketsIMM and the TitanicThe cost of the sinking of the Titanic for IMMConclusionThe Titanic: a test of the efficiency of the markets American financial The efficiency of stock markets involves studying the extent to which, how quickly, and how accurately available data is incorporated into security prices. Financial economists classify the efficiency of capital markets into different categories based on the significance of the information available about security prices. Empirical evidence from the study of the sinking of the Titanic in 1912 and its effects on the International Mercantile Marine Company, its parent company, is constructive in the perception of the efficiency of capital markets. The efficiency of American stock markets is therefore analyzed through the study of theories from the economic literature on the Titanic. Say no to plagiarism. Get a tailor-made essay on "Why violent video games should not be banned"?Get the original essayIMM and the TitanicThe sinking of the ship Titanic in 1912 had a great impact on the company that built the ship, a representation of the entire economy. . The fall of the liner can be seen as a collapse of the company's shares and its recovery has been no less spectacular than that of the rest of the market. IMM's formal efforts after the sinking of the Titanic bring the idea of ​​a strong capital market to the United States as a legitimately debatable issue. In many ways, current American culture acts as if financial analysts proved the state of the market decades ago. It is logical that a gap has emerged between current economic literature and the enduring conception of market efficiency in legal culture (Khanna, 1998). Many prominent theorists perceive that price influences are not associated with rational expectations regarding asset values. Alternative models developed by researchers suggest that prices deviate significantly from asset values, which may be linked to the Titanic. IMM, having been incorporated under the laws of New Jersey in 1893, had the prices of its assets highly volatile. The management of the publicly traded company was changed in 1902 by the amended certificate of incorporation; a sign of an efficient capital market. The highly volatile company invested in three huge ships due to the encouraging efficiency of the capital markets. The Titanic was one of three modern ships (Khanna, 1998). The volatility of the IMM company is indicated when the ship Titanic nearly collided with the American liner New York and when it ultimately hit a gigantic iceberg which led to the sinking. Despite the fact that the company that managed the Titanic changed its name from International Navigation Company to International Mercantile Marine, the company still perceived all available information in exactly the same way. The capital market is considered efficient, as indicated by the case where the IMM company was unable to determine the precise value of the ship after the calamity. Financial analysts estimated the net worth of the ruined ship based on company and preferred stock returns at the time the calamity occurred (Khanna, 1998). The Cost of the Titanic Sinking to IMMA After this unfortunate, headline-grabbing incident, information on the cost of the Titanic, insurance cost and net loss was readily available to facilitate value calculations merchant. For example, the procedure used by a financial analyst for estimation relied entirely,.