QUESTION 1): The efficient market hypothesis says that on average managers will:

-tend to earn below average rates of returns

-not be able to earn an excess return

-outperform investors with inside information

-tend to outperform most market participants

-earn the same rate of return over time regardless of the risk assumed.

QUESTION 2) Which of these are arguments that support the position that the efficient market hypothesis fails in actual application? I. Arbitrage may involve too much risk to offset irrational behavior II. Investors may be irrational III. Irrationalities are countervailing IV. Irrationality may be related across investors

A) II only

B) I and II only

C) I, II, and IV only

D) II, III, and IV only

E) I, II, III, and IV