Question: Suppose the Russell 1000 increased by 8 percent during the
Suppose the Russell 1000 increased by 8 percent during the past year whereas, the Russell 2000 increased by 15 percent. Discuss the implication of these results.
Relevant QuestionsYou are given the following information regarding prices for a sample of stocks.a. Construct a price-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1.b. ...Discuss the rationale for expecting an efficient capital market. What factor would you look for to differentiate the market efficiency for two alternative stocks?For many of the EMH tests, it is really a test of a "joint hypothesis." Discuss what is meant by this concept. What are the joint hypotheses being tested?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?Compare the abnormal returns in Problems 1 and 2 and discuss the reason for the difference in each case.
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