How do small investors benefit from efficient markets

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Reference no: EM13245423

Considering three different forms or levels of market efficiency. Refer to the oppropriate forms of market efficiency in answering the following questions:

a) Why is insider trading illegal?

b) Why and how do small investors benefit from efficient markets?

c) If you were a stock trader and markets were not efficient, how would this influence your trading activity? What does this tell you about why markets may be efficient?

d) Consider the case of a day trader who looks only at the past history of stock prices in conducting his or her trades. How likely would it be for such a person to beat the market? What does this suggest about investing in the "entire market" (such as by purchasing shares in an index fund) rather than attempting to pick individual stocks?

Reference no: EM13245423

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