4. You developed a new trading strategy that invests equally in stocks whose correlation with S&P 500 index is less than 0.1 (but greater than 0), and rebalances the portfolio monthly. You recognized that the trading strategy always earns returns higher than the 1-month Tbill rate. Does this violate the EMH? 5. Assume that you know the LED plan of company XYZ (in the near future). This information is not known to anyone except the managers of the company. Under market efciency, can you make money based on this information? PV 1. e-Money rates. An internet company, eMoney1 is offering a money market account with an A.P.R. of 5%. What is the effective annual interest rate offered by eMoney if the compounding interval is (a) annual (b) monthly (c) quarterly (d) continuously? Continuously compounded interest rate is the A.P.R when the compounding frequency goes to innity. You might nd the following identity useful: 6 = limknoo (1+ if\