1. Which of the following statements concerning market efficiency is true?
a. If the market is weak-form efficient, it is also semistrong-form efficient.
b. If the market is semistrong-form efficient, it is also strong-form efficient.
c. If the market is weak-form efficient, it is also strong-form efficient.
d. If the market is semistrong-form efficient, it is also weak-form efficient.
2. As winner of a recruiting competition, you can choose one of the prizes given below. If the interest rate is 10%, which prize do you think is worth the most?
a) $100,000 today
b) $150,000 at the end of five years
c) $5,000 next year and increasing thereafter by 4.5% a year forever
d) $15,000 each year of 10 years