Explain how asset bubbles may (or may not) support the efficient market hypothesis.

Investment analysis short essay question

Please answer the following short essay question, each can be answered in a succinct paragraph.

1. What are the five anomalies (from the efficient markets chapter, semi-strong section)? Which three of the five help to explain the best performing style-capitalization equity returns over longer periods of time?

2. Explain how asset bubbles may (or may not) support the efficient market hypothesis.

3. Explain how the positive earnings announcement price drift (or Surprise Unexpected Earning (SUE)) works. How would you use SUE in this Fall 2020 earning reporting season if you were a hedge fund manager?

4. Explain how you would use the Security Market Line (SML) to discern the breadth of a portfolio’s individual stock winners vs. losers.

5. Explain how the link between price (P) and intrinsic value (V) are viewed by proponents of the Efficient Market Hypothesis and by those who are not proponents.

6. What are the two questions that a fixed income portfolio manager needs to address when managing an active portfolio?