Concerning Home Capital Group(HC), describing the issues faces by HC following public revelation of problems witMay h its high-risk mortgage portfolio and its failure to disclose.

a. As noted in the vignette, HC's share price fell significantly when its mortgage problems were revealed. Share price also fell when HC obtained its $2 billion line of credit from an Ontario pension fund at a very high rate of interest. In addition, while not reported in the vignette, share price rose following the settlement of the OSC investigation. Other important events, however, received no significant market reaction. For example, there was little reaction in 2017, when HC suspended its dividend, and announced prestigious new directors. The appointment of a new CEO in July 2017 also drew little market reaction. Are the share price reactions and non-reactions to these various events consistent with efficient securities market theory? Explain why or why not.

b.Warren Buffet's Berkshire Hathaway paid $9.55 per share for nearly 20%of HC's equity. Just before the purchase HC's share price was $15.42. Yet, share price quickly rose to $16.65 following the purchase, with a further increase to $19.00 the next day. Why did Warren Buffet receive this discount? Was the subsequent rise of shar price to $19.00 consistent with efficient securities market theory? Explain.