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Question 3 One of your colleagues says that the stock market is not efficient because some accounting ratios have been shown to have predictive powers.
Question 3 One of your colleagues says that the stock market is not efficient because some accounting ratios have been shown to have predictive powers. () Explain which of the main forms of efficiency is most relevant to this situation. [4] (ii) Comment on whether you agree with your colleague. [4] (ii) Explain the difference between active and passive fund management in terms of the concept of market efficiency. [4] [Total 12]
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