1. You are aware that your neighbor trades stocks based on confidential information he overhears at his workplace. This information is not available to the general public. This neighbor continually brags to you about the profits he earns on these trades. Given this, you would tend to argue that the financial markets are at best _____ form efficient.

Perfect

Weak

Semi strong

Strong

Semi weak

2. Which one of the following statements related to market efficiency tends to be supported by current evidence?

Mispriced stocks are easy to identify.

It is easy for investors to earn abnormal returns.

Markets are most likely only weak-form efficient.

Markets tend to respond quickly to new information.

Short-run price movements are easy to predict.