Question

Jane believes that she can "beat the market" on a consistent basis by basing her trades...

Jane believes that she can "beat the market" on a consistent basis by basing her trades on the pattern of prices that now exist. If true, what would Jane's trading pattern violate?

Homework Answers

Answer #1

Jane’s trading pattern would violate “efficient markets”.

As per the efficient market hypothesis the current prices of shares and stocks reflect all information. Thus makes it impossible to produce risk adjusted excess returns from the trade of a stock either through fundamental analysis or through technical analysis.

As per the efficient market hypothesis stocks always trade at their fair value and hence to beat the market Jane’s trading pattern will violate the efficient markets hypothesis.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A young investor believes that he can beat the market by picking stocks that will increase...
A young investor believes that he can beat the market by picking stocks that will increase in value. Assume that on average 46% of the stocks selected by a portfolio manager will increase over 12 months. Of the 27 stocks that the young investor bought over the last 12​ months, 15 have increased. Can he claim that he is better at predicting increases than the typical portfolio​ manager? Test at α=0.05 Question: Calculate the test statistic. Answer: _______________________ (round to...
Jane wishes to invest $ 20,000 for one year provided that she can anticipate 5 %...
Jane wishes to invest $ 20,000 for one year provided that she can anticipate 5 % growth in her buying power. She forecasts that the inflation rate for the upcoming year will be 1 %. a) What is the lowest rate at which she would be willing to make a loan? (4 decimal accuracy) b) What rate of growth in her buying power does she look forward to if she is able to loan out her money for exactly one...
Mrs. Smith has saved $2,500 toward a new car and believes that she can afford monthly...
Mrs. Smith has saved $2,500 toward a new car and believes that she can afford monthly payments of $250. 1) If her bank offers financing terms of 60 months at a nominal 12% interest, what is the most she can pay for a car? 2) The dealer offers 9% financing but the loan is for only 36 months. What is the most she can pay for a car on this basis? Please Show Solutions/Factors
Jane loved having her own garden. She liked to water the plants, pull the weeds, and...
Jane loved having her own garden. She liked to water the plants, pull the weeds, and harvesting the fruits and vegetables as they ripened. Her garden consisted of corn, tomatoes, green beans, okra, zucchini, squash, lima beans, watermelon, and cantaloupe. She would also can excessive vegetables and fruit to use at later times. On this particular occasion, Jane noticed that the pressure cooker, the instrument used to sterilize the canned food, did not seem to be acting quite right, but...
Jane owns a hairdresser franchise business. As at 1 July 2018, stock on hand of hair...
Jane owns a hairdresser franchise business. As at 1 July 2018, stock on hand of hair related products was valued at $300,000 (at cost). During the year, she purchased an additional $250,000 worth of stock and sales totaled $600,000. As at 30 June 2019, stock on hand of hair related products was valued at $400,000 (at cost), $450,000 (at replacement value) and $500,000 (at market selling value). a) Calculate Jane’s business’s taxable income from her trading activities for 2018/19. (Ignore...
A young investor believes that he can beat the market by picking stocks that will increase...
A young investor believes that he can beat the market by picking stocks that will increase in value. Assume that on average 47 % of the stocks selected by a portfolio manager will increase over 12 months. Of the 28 stocks that the young investor bought over the last 12​ months, 19 have increased. Can he claim that he is better at predicting increases than the typical portfolio​ manager? Test at alphaequals0.05. What are the null and alternative hypotheses for...
Sarah is a single mom who can earn $12/hour in the labor market. She has a...
Sarah is a single mom who can earn $12/hour in the labor market. She has a maximum of 168 hours/week that she can choose to devote to the labor market.Under a government program, Sarahgets a subsidy of 40% of her weekly salary if she earns from $0-$700. If she makes from $701-$900 she can keep the maximum subsidy but does not earn an additional subsidy. For every dollar she earns greater than $900, she loses 70 cents of her subsidy....
Brittany Callihan sold stock (basis of $184,000) to her son, Ridge, for $160,000, the fair market...
Brittany Callihan sold stock (basis of $184,000) to her son, Ridge, for $160,000, the fair market value. a. What are the tax consequences to Brittany? b. What are the tax consequences to Ridge if he later sells the stock for $190,000? For $152,000? For $174,000? c. Write a letter to Brittany in which you inform her of the tax consequences if she sells the stock to Ridge for $160,000. Explain how a sales transaction could be structured that would produce...
Jane operates a muffin shop in a market where she takes the price of $2 per...
Jane operates a muffin shop in a market where she takes the price of $2 per muffin as given. Her total cost of production is given by TC(q) = 15 + 0.01q2 and her marginal cost of production is given by MC(q) = 0.02q. At her profit maximizing output level of q* = ______, Jane earns ______ profit. Question 7 options: a) 50 muffins; $5 b) 100 muffins; $85 c) 100 muffins; $100 d) 2,000 muffins; $1,580 e) 0 muffins;...
Prices of bond futures can be used to access the markets expectations about future interest rates...
Prices of bond futures can be used to access the markets expectations about future interest rates and therefore can be used as the basis for pricing other financial securities. A 10-year annual coupon bond with face value $1,000 is currently selling for $919. The futures price of this bond for delivery in 1 year is $888. The bond pays coupon of $88 annually. Assume that the coupon is paid before the delivery of the bond. (a) What is the 1-year...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT