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case study
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  1. Introduction
  2. You have two stocks with the Expected Return (ER), Standard Deviation (SD), and Correlation Coefficient in the attached list.
  3. You put ?15,000 into a group of French stocks on January 1. On June 30, your portfolio's value was the amount listed in the attached list. The next day you added another ?3000 to the portfolio
  4. You have purchased stock for $35/share. You want to sell the stock once you have made the acceptable profit in the attached list. However, you do not want to lose any more than the acceptable loss in the attached list
  5. You have decided to buy stock options. You have purchased a call option on Stock A with the exercise price and premium per share in the attached list. You have also purchased a put option on Stock B with the exercise price and premium in the attached list
  6. Conclusion

An Efficient Markets Hypothesis is an investment theory saying that all relevant information is always reflected in a security's market place by the security price and its trends. In other world, it states that it is impossible to beat the market because stock market efficiency causes stock prices to reflect all relevant information in all cases. Attempts to outperform the market are therefore more based on chance than on analytical skills.

The Efficient Market Hypothesis theory exists in three various degrees:
- Weak form: current stock prices reflect all past available security market information. Past prices and volume data have therefore no relationship with the future trends of security prices. It is impossible to achieve excess returns by using technical analysis.
- Semi-strong form: stock prices reflect all past and current information available to the public. They adjust rapidly to the release of all new public information.
- Strong form: stock prices reflect all relevant information, including information not yet publicly disclosed.

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