1. Under the efficient market hypothesis, what is the assumption about the processing of new information, and what effect does this have on security pricing?

2. What does the weak form of the efficient market hypothesis suggest? What are the two major ways in which it has been tested?

3. Would low correlation coefficients over time between stock prices tend to prove or disprove the weak form of the efficient market hypothesis?

4. Under the semistrong form of the efficient market hypothesis, is there anything to be gained from a corporate treasurer changing accounting methods to increase earnings per share when there is no associated economic benefit or gain?

5. Why does fundamental analysis tend to make the market efficient?

6. Suggest some studies that would indicate the market is not completely efficient in the semistrong form.

7. What does the strong form of the efficient market hypothesis suggest? Are major test results generally supportive of the strong form?

8. How do specialists, insiders, and mutual fund managers fare in terms of having access to superior information to generate large returns? (Comment on each separately.)

9. Define special or abnormal returns.

10. What is the basis for upward movement in the stock of an acquisition candidate?

12. Why does abnormal return potential sometimes exist in the new-issues market?

13. What are some factors to consider before buying a new issue?

15. What are some reasons a firm may repurchase its own stock?