For each of the following scenarios, discuss whether profit opportunities exist from

trading in the stock of the firm under the conditions that (1) the market is not weak form

efficient, (2) the market is weak form but not semi-strong form efficient, (3) the market

is semi-strong form but not strong form efficient, and (4) the market is strong form

efficient.

(i) The stock price has risen steadily each day for the past 30 days.

(ii) The financial statements for the company were released three days ago and you

believe you have uncovered some anomalies in the company’s inventory and

cost control reporting techniques that are causing the firm’s true liquidity

strength to be understated.

(iii) You observe that the senior management of a company has been buying a lot of

the company’s stock on the open market over the past week.

(Word Limit – 500 words.)

20 Marks