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1. Efficient Market Hypothesis (40 points) (a) What is the efficient market hypothesis? (b) Does the efficient market hypothesis imply that there is no arbitrage

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1. Efficient Market Hypothesis (40 points) (a) What is the efficient market hypothesis? (b) Does the efficient market hypothesis imply that there is no arbitrage opportunity? (c) Does the efficient market hypothesis imply that stock returns are unpredictable and why? (d) Is the efficient market hypothesis a good description of financial markets? Discuss

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