Create argument for version of efficient market hypothesis

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Reference no: EM131151446

DISCUSSION QUESTIONS FOR FINANCE

1) "CAPM" Please respond to the following:

• Suppose investors believe that the standard deviation of the market-index portfolio has increased by 50%. Speculate on two potential implications of CAPM regarding the effect of this change on the required rate of return for a company's investment projects.

• From the e-Activity, compare the returns of the two selected funds for the past 10 years. Determine whether you believe that the single-index CAPM should or should not be rejected. Explain why or why not.

2) "The Efficient Market Hypothesis" Please respond to the following:

• Create an argument for the version of the efficient market hypothesis (i.e., weak, semi-strong, and strong) that you most strongly agree with. Provide support for your position.

• Take a position on the following statement: Highly variable stock prices suggest that the market does not know how to price stocks. Support your answer with examples.

Reference no: EM131151446

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