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Consider the following scheme for making money in the stock market.

“You are a mathematician specializing in chaos theory. This is still a small branch of mathematics, and there are very few other chaoticians studying the stock market. You have found a very subtle deterministic, chaotic pattern in stock price changes which has been repeating dependably. You use this pattern to predict which stocks are going to rise in price and which are going to fall. Buy stocks when you predict a rise and sell (and sell short) those for which you predict a fall.” .

If the market is completely efficient can you make money this way? If your profits require an inefficiency, what kind is it?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92310067

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