1.To answer the following questions, refer to the articles entitled "Are Markets Efficient?" by Malkiel and Shleifer

• Two firms, Beauty Products (BP), and Skincare Products (SP), agreed to merge their interests in 2017, while remaining separate and distinct entities, which separate issues of stock. BP will get 75% of the combined profits of the two firms, while SP will get 25%. BP has 250,000,000 shares outstanding, at a price of $50 per share; SP has 100,000,000 shares outstanding, at a price of $35 per share. Are these facts consistent with EMH? Why or why not?

• What are these specific examples given by Malkiel of market phenomena that the "new breed of economists" cite as contradictions of EMH?

• Malkiel reports that he and several of his Princeton colleagues attempted to exploit the overreaction phenomenon leading to return reversals. What, specifically, did they do in this attempt? What were the results of their attempt? Why does Malkiel maintain that the results do not constitute a contradiction to EMH?