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  • Problem Set 2 (Part I)

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    steve bob
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    This document outlines a problem set assignment with 6 questions related to market efficiency. Students must submit their answers in a MS Word file named with their first and last name by April 22, 2023 at 11:59 pm. For each day an assignment is late, 2 points will be deducted from the student's raw score. The questions address defining market efficiency, differentiating the three forms of market efficiency, and describing investment strategies like buying small/shorting large stocks, contrarian strategy, and momentum strategy, explaining how each violates market efficiency principles.

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    This document outlines a problem set assignment with 6 questions related to market efficiency. Students must submit their answers in a MS Word file named with their first and last name by April 22, 2023 at 11:59 pm. For each day an assignment is late, 2 points will be deducted from the student's raw score. The questions address defining market efficiency, differentiating the three forms of market efficiency, and describing investment strategies like buying small/shorting large stocks, contrarian strategy, and momentum strategy, explaining how each violates market efficiency principles.

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    3 views1 page

    Problem Set 2 (Part I)

    Uploaded by

    steve bob
    This document outlines a problem set assignment with 6 questions related to market efficiency. Students must submit their answers in a MS Word file named with their first and last name by April 22, 2023 at 11:59 pm. For each day an assignment is late, 2 points will be deducted from the student's raw score. The questions address defining market efficiency, differentiating the three forms of market efficiency, and describing investment strategies like buying small/shorting large stocks, contrarian strategy, and momentum strategy, explaining how each violates market efficiency principles.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Problem Set 2 Part I (15 marks)

    Submit your typewritten solutions in MS Word file. Name your file as first name_last name.doc. Show
    your complete solution to get full marks and work independently. Each day of late submission will merit
    a deduction of 2 points from your raw score. Deadline: 22 April 2023 11:59 pm

    1. (2 Marks) In the context of our discussion, explain the concept of market efficiency.

    2. (3 Marks) Discuss and differentiate the three forms of market efficiency. Do statistical tests of
    market efficiency prove or disprove each of the three forms?

    3. (2 Marks) Describe the investment strategy of buying small and short-selling large stocks.
    Explain how it violates the principle of market efficiency.

    4. (2 Marks) Describe the investment process behind contrarian strategy. Explain how it violates
    the principle of market efficiency.

    5. (2 Marks) Describe the investment process behind momentum strategy. Explain how it violates
    the principle of market efficiency.

    6. (4 Marks) Pick two of the behavioral biases we discussed in class. Show how it applies in your
    daily life.

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