1) a) The estimate that I obtained fro Alfa is -‐0.111502. No this estimate is not
statistically significant because the prob. is equal to 1.1094. This means that we reject the null hypothesis. b) The estimate that I obtained for Beta is 0.880425. Yes this estimate is statistically significant because the prob. is equal to 0.00000. This means that we do not reject the null hypothesis for this coefficient. c) 88 percent of the stock returns fluctuations are explained by general movements in the market.
2) Based on the article and the findings, I would have to say that I do not agree with the Efficient Market Hypothesis. The theory states that the market is always correct and that all the markets info is incorporated into the pricing of the stocks. However if we look back in history we can see that there have been many erratic shifts in the market that were not efficient. Some examples of when the market was not efficient include during depressions, and the dot com crash. Supposedly, if the market did have all the information that is going on and incorporated all that info in the formation of the stock prices, then a crash or a crisis should never exists. Every second of every day, the stock prices should be correct and a problem would not have to occur. Also if the stock
