An article in the Economist notes that according to the efficient markets hypothesis: “buying shares in Google because its latest profits were good, or because of a particular pattern in the price charts, was unlikely to deliver an excess return.”
a. What does the article mean by “an excess return”?
b. Why would buying Google because its latest profits were good be unlikely to earn an investor an excess return?
c. Why would buying Google on the basis of a particular pattern in its past stock prices be unlikely to earn an investor an excess return?