3. Efficient Market a. Explain what is an efficient market? b. Explain whether an efficient market reflects irrational or rational investors? 4. Suppose we run the following regression: Return (t) Prob = 0.2 + 1.2 Return (t-1) + e(t) (0.002) (0.0021) t = Months Return at t-1 (previous) predicts return at t. In this situation, is the market efficient? Explain. 3. Efficient Market a. Explain what is an efficient market? b. Explain whether an efficient market reflects irrational or rational investors? 4. Suppose we run the following regression: Return (t) Prob = 0.2 + 1.2 Return (t-1) + e(t) (0.002) (0.0021) t = Months Return at t-1 (previous) predicts return at t. In this situation, is the market efficient? Explain