Asset pricing

1. Answer the following questions about trading strategies in efficiently inefficient markets.
2. (a)Explain the meanings of market timing and security selection strategies, highlight- ing their similarities and differences
3. (b)You work as an analyst at a discretionary equity hedge fund. You have an invest- ment thesis that it pays to buy the "best in breed", that is, stocks that are the industry leaders. You find the companies that are currently the largest in each industry and track their performance the last 5 years. This portfolio significantly outperforms the market over the time period. Are there any issues with this anal- ysis? Should the hedge fund buy this portfolio and, if so, what are the risks?