Define and discuss the semistrong-form EMH. Describe the two sets of tests used to examine the semistrong-form EMH.
Answer to relevant QuestionsDescribe how you would compute the abnormal rate of return for a stock for a period surrounding an economic event. Give a brief example for a stock with a beta of 1.40.Define and discuss the strong-form EMH. Why do some observers contend that the strong-form hypothesis really requires a perfect market in addition to an efficient market? Be specific.In a world of efficient capital markets, what do you have to do to be a superior analyst? How would you test whether an analyst was superior?Compute the abnormal rates of return for the five stocks in Problem 1 assuming the following systematic risk measures (betas): Stock βiB ......... 0.95F ......... 1.25T ......... 1.45C ......... 0.70E ...Why are investors' utility curves important in portfolio theory?
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