a) Warren Buffet described derivatives as weapons of mass destruction. Explain. What kind of investments are safe in Stock market? b) What is the phenomenon of the size effect in stock performance? How does it relate to the 'turn-of- the-year' effect? Can you suggest any good reasons why small stocks, after adjusting for beta, still do better than large stocks? What strategy would you follow to exploit this anomaly? What factors do you have to keep in mind? c) A study examining market reactions to earnings surprises found that prices tend to drift after earnings surprises. What does this tell you market's capacity to learn from events and new information? What cross-sectional differences would you expect to find in this learning behavior? (i.e. Would you expect to see a greater price drift in some types of firms than in others? Why?) How would you try to exploit this anomaly? What possible costs would you have to keep in mind? d) Suppose you are following a retailing stock which has a strong seasonal pattern to sales. Would you expect to see a seasonal patter in the stock price as well? e) Do your SWOT analysis and explain in detail your strengths, weaknesses, opportunities and threats