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Part B (4 marks) Describe the THREE forms of market efficiency. Under what form of market efficiency would an investor who reads annual reports and

Part B (4 marks)

Describe the THREE forms of market efficiency. Under what form of market efficiency would an investor who reads annual reports and makes their stock picks based on public information outperform the market?

Part C (2 marks)

Why does CAPM imply that investors should trade very rarely? In reality we see large amounts of trading each day. What bias helps explain this trading behaviour?

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