Use the efficient market theory to explain how dart-throwing may be a desirable investment
strategy
Read Theory in Practice 4 (attached) and answer the following questions:
1) Use the efficient market theory to explain how “dart-throwing” may be a desirable investment
strategy
2) Explain Prof. Malkiel’s argument that risk differences may be driving the superior average
returns earned by the pros and the Dow Jones index. How would you determine whether risk
differences were affecting the results?
3) Explain another possible reason, not mentioned by Prof. Malkiel, for the superior returns
earned by the pros.
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