Homer recently opened an Internet trading account believing he can capitalize on numerous stock mispricings now that transactions costs are very low. Since so many novice day traders are involved in the stock market, Homer will find:

a market in which numerous abnormal return investment opportunities can easily be identified

a market with serious imperfections due to the similarity of financial assets

a market offering competitive pricing, intense analysis, and decreasing transaction costs

great value in using past stock price changes to forecast future price changes

many opportunities to profit from abnormal excess returns