7. In technical analysis, there is a pattern called "head and shoulders" (search it up online). Suppose it is true that, whenever the pattern occurs, stock prices tend to crash and produce negative average returns. Is this consistent with the efficient market hypothesis? If yes, explain why. If this is not consistent with EMH, explain which of the three forms of efficient market hypothesis is being violated by the statement that "you can predict price crashes using heads and shoulders", and why. 8. You are given the information below about company X and two comparable com- panies. Your goal is to conduct a per-share valuation of company X's stock. 2 Company Company X Comparable 1 Comparable 2 Stock price/share Earnings/share Sales/share ? $1 $10 $10 $1 $10 $50 $2.5 $20 (a) Perform a comparables valuation of a share of company X stock using the average P/E ratio of comparable companies. (b) Perform a comparables valuation of a share of company X stock using the average price/sales ratio of comparable companies