PLEASE ANSWER ALL PARTS:

PART A:

There are 10,000 mutual fund managers. 14 claim that they are the best, since their fund beat the relevant index every year for 6 years.

However, you think that markets are efficient and that the average fund manager is as likely to deliver a better performance than the index as to underperform the index, before fees.

What is the probability that the average single fund managers beats the index 6 years in a row (before fees)?

How many fund managers would you expect to beat the index 6 years in a row if only luck and no skill was involved?

PART B: Choose one.

____ makes markets efficient.

-Financial transparency

-Government regulation

-Insider information

-Competition between investors

PART C: Choose one.

If markets are semistrong-form efficient, _____.

-insiders cannot benefit from their inside information

-it makes sense to pay for investment advice from stock market analysts

-projecting past price trajectories into the future can be profitable

trying to identify mispriced securities is futile