Discuss the following questions:

A successful firm like Microsoft has consistently generated large profits for years. Is this

$.$ a violation of the EMH?

A successful investor has consistently beaten the market for three years. Is this a violation of the EMH?

Why are the following "effects" considered efficient market anomalies? Are there rational explanations for any of these effects?

a$.$ P$/$E effect.

b$.$ Book$-$to$-$market effect.

c$.$ Momentum effect.

d$.$ Small$-$firm effect.

Respond to each of the following comments.

a$.$ If stock prices follow a random walk, then capital markets are little different from a casino.

b$.$ A good part of a company's future prospects are predictable. Given this fact, stock prices can't possibly follow a random walk.

c$.$ If markets are efficient, you might as well pelect your portfolio by throwing darts at the stock listings in The Wall Street Journal.