1. Sam, an avid day trader, has noticed that a particular stock has increased in value in each of the last three trading days. Given this trend, he believes the stock price will increase over the next two trading days. This is an example of:
a. a timing decision.
b. irrational exuberance.
c. representativeness.
d. conservatism.
e. arbitrage.
2. Your best friend works in the finance office of the Delta Corporation. You are aware that this friend trades Delta stock based on information he overhears in the office. You know that this information is not known to the general public. Your friend continually brags to you about the profits he earns trading Delta stock. Based on this information, you would tend to argue that the financial markets are at best _____ form efficient.
a. weak
b. semistrong
c. semiweak
d. strong
e. perfect