A long time friend is fond of saying, "When we win the lottery..." Not "if we win..." Her expectation of winning reveals that she has an incorrect view of a lottery's probability distribution (and her actual chance of winning).

True

False

Conservatism, an Information Processing error, is said to be a factor in stocks with chronically low price/book ratios. Traders are slow to update their assessments of the firm's prospects, despite receiving encouraging news about the company's growth prospects.

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False

"Limits to arbitrage" is suggested as an impediment to achieving the perfect markets needed, in part, to satisfy the EMH. We know arbitrage takes at least two forms, "pure" and "quasi." In the lecture example, when using quasi arbitrage, Shirley invests some of her own money to complete the trade,

True

False