Short Answer Questions What should the primary role of portfolio managers be given the research to date on their market performance and based on the assumption that markets are efficient?

A trader was found guilty of violating insider trading laws. As part of his sentencing, he had to forfeit the excessive profits earned on the illegal trades. What does this conviction indicate about the current form of market efficiency? Identify and describe the three forms of the efficient market hypothesis discussed in class.

Identify and describe four of the six components of nominal interest rates as supported by modern term structure theory.

Identify and briefly describe the three classic theories of the term structure of interest rates.