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Question A (10 Marks) Given the following returns on two stocks over seven consecutive days, what can you conclude about financial market efficiency? 1 2
Question A (10 Marks)
Given the following returns on two stocks over seven consecutive days, what can you conclude about financial market efficiency?
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
Stock x | +2% | 1% | +3% | 2% | +4% | -3% | +5% |
Stock y | +2% | +2% | 1% | 3% | 1% | +5% | 1% |
.
Question B (19 Marks)
If you notice a group of stocks that goes up in price when the market price of the stock divided by its book value is below 0.75 and the price goes down when the ratio reaches 1.35, what can you say about market efficiency?
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