Question

Explain what each means as evidence for or against an efficient market.

a. An anomaly found.

b. An anomaly that you believe is actually a risk.

c. Data mining to find an anomaly

Answer 1

Ans.

Options (a ) An anomaly found : in the non investing world ,an anomaly is a strange occurance. In financial markets, anomalies refers to situation when a security or group of securities perform contrary to the notion of efficient markets,where security price reflects all information at any point in time.

Option ( b ) Earning above market return without taking on more risk than the the market is nearly impossible, a/c to efficient market hypothesis.there are generally accepted anomalies of EHM are ( 1 ) size effects ( 2 ) valuation effect (3) momentum effects.

Options ( 3 ) the goals of anomaly detection is to identify unusual or suspicious cases based on deviation from the norm with in data is seemingly homogeneous

anomaly detection is an important tool : in india exploration ( 2 ) and unperceived learning .

the model train in data that is homogeneous that is all cases are in one class then determine if a new case is similar to the cases observed or in some how abnormal or suspicious.