Define adaptive and rational expectations. Give examples of each.

Would a liquid market be an efficient market? Why or why not?

In a market in which investors and traders have rational expectations, what should the price of an asset equal?

Give a concise definition of the efficient markets hypothesis. What assumptions does it require about liquidity and information?

If you believe that the stock market is an efficient market, why would an investment strategy of "buy and hold" be a good idea?

Why are fads inconsistent with the predictions of the efficient market hypothesis? Also define: revert to the mean, circuit breakers, the greater fool theory.

What is program trading? Does it play a significant role in increasing market volatility? What are some of the other problems with EMH discussed in class today? Why would Warren Buffett likely not embrace this hypothesis?