Not so long ago, the Washington Post contained an advertisement for a stockbroker in which the broker boasted that his recommendations had "beat the market five years in a row." This is a 4 part question, please answer all 4 parts.

1. What does this broker likely mean when he says he "beat the market?"

2. What is the probability of this occurring if this broker actually is no better than average?

3. What conditions must hold true in order for this broker actually to "beat the market" five years in a row?

4. What does economic evidence have to say to us about the probability that this broker's decisions and trades will "beat the market?"

Answer rating: 100% (QA)

Answering the Stockbroker Advertisement 1 Meaning of Beating the Market When the broker claims to have beat the market five years in a row they likely ... View the full answer