You analyzed the returns of a sample of stocks. You found that, on average, the ﬁrms...

You analyzed the returns of a sample of stocks. You found that, on average, the ﬁrms with high E/P ratios have higher subsequent returns.

(i) Discuss an explanation for this pattern that is consistent with the EMH.

(ii) Discuss an explanation that is not consistent with the EMH.

(A couple sentences per part.)

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jeff jeffy answered 2 months ago

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