If securities markets are efficient, what is the NPV of any security, regardless of its risk?
From time to time the federal government considers passing into law an excess profits tax on U.S. corporations.
Given what you know about efficient markets and the CAPM, how would you define excess profits? What would be the effect of an excess profits tax on the investor?
State the assumptions inherent in this statement: A condition for market efficiency is that there be no second-order stochastic dominance.