1) A real return of 10% per year means that a $10,000 investment will grow to $20,000 in:
A. 10 years.
B. 7 years.
C. 15 years.
2) High-frequency trading involves scanning the latest news and stock quotes with high-tech computers and using the information to trade stocks very quickly. Because it is highly automated, it happens a thousand times faster than an eye can blink. Though each trade might make a fraction of a penny, it accounts for about two-thirds of the stock market trading. How does this financing trend reflect the efficient markets hypothesis?
A. Investing in stocks this way has a low risk of failure, thus a low return.
B. Computers ensure public knowledge is instantly embodied in the stock price.
C. Buying and holding stocks allows the investor to circumvent this volatility.