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Part (a) The version of the efficient market hypothesis upon which we focused is the...

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Accounting

Part (a) The version of the efficient market hypothesis upon which we focused is the following statement: No trading rule has an expected, risk-adjusted, net return greater than that provided by a risk-free asset. This statement contains three important qualifications, written above in boldface. Please briefly explain the importance of each one. By explain the importance, I mean that you should explain why this version of the EMH would be easy to reject if the indicated qualification were omitted. Zero points will be awarded if you just write definitions.

(i) Expected

(ii) Risk-adjusted

(iii) Net

i) Give an example of a trading rule that we should NOT expect to provide evidence against the version of the efficient market hypothesis stated in Part (a) of this question.

(ii) Are there any trading rules that will neverunder any circumstancesprovide evidence against the version of the efficient market hypothesis stated in Part (a) of this question? If so, give an example; if not, briefly explain why not. [No points will be awarded if no example/explanation is given.]

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