1. Which of the following concerning the efficient market hypothesis is correct?

a) The weak form of ef?ciency maintains that today’s stock price re?ects all the information that could be acquired through a close analysis of the company and the economy

b) The ef?cient market hypothesis (EMH) states that capital markets do not incorporate all the relevant information into existing securities’ prices

c) If EMH were correct, then arguably it would be impossible to beat the market with superior skill or intellect

d) There are five levels of market efficiency

e) The EMH is universally accepted by ?nancial economists as fact.

2. Which of the following is not an economic function of mutual funds?

a) Exploit economies of scale in trading and transaction costs

b) Provide the individual investor with the professional expertise necessary to earn abnormal returns through successful analysis of securities

c) Beat the market on every occasion

d) Provide the individual investor the opportunity to diversify

e) Provide an barrier between the individual investor and the abrupt changes of the marketplace.