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If all investors believe that the
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- This problem, like the first one, is a brain teaser. If a market is efficient, how is it possible for an investor to earn a profit?“Investors can only get normal profit”. Give detailed explanation on this statement and apply the market efficiency theory in your answerWhat is weak-form EMH? What would you expect to see/not see if markets where weak form efficient? In other words, can you think of market events that would serve as evidence that market is or isn’t weak-form efficient?
- “Investors cannot beat the market”. Elaborate on this statement and apply the efficiency continuum in your explaination.An efficient market is one in which no one ever profits from having better information than the rest. Discuss this statement and whether or not you find this to be true, false or are you uncertain. Why?Which type of market efficiency is not true? Why?
- What is semi-strong-form EMH? What would you expect to see/not see if markets where semi-strong form efficient? In other words, can you think of market events that would serve as evidence that market is or isn’t semi-strong-form efficient?What would happen to market efficiency if all investors attempted to follow a passive strategy?Why would an advocate of the efficient market hypothesis believe that even if many investors exhibit the behavioral biases, security prices might still be set efficiently?
- An efficient market is one in which no one can profit from having a better information than the rest. Is the statement true or false or uncertainWhat will you do if your market does not develop as quickly as you predicted? What if your market develops too quickly?If markets are efficient, how is it possible that market bubbles and crashes occur?