Page 110 - CAPE Financial Services Syllabus Macmillan_Neat
P. 110
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2. (a) State TWO supporting and TWO opposing views of the Efficient Market Hypothesis DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA
(EMH).
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[4 marks]
(b) “If the market is efficient, prices reflect all relevant information and there are no mispriced
securities. Since assets are never undervalued or overvalued, it is impossible for investors
to lose money in an efficient market.”
Explain, using an example, why this statement is incorrect.
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[5 marks]
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