(i) Explain the difference between an efficient market and an arbitrage-free market.
Empirical investigations of stock market returns have revealed a fractal dimension of 1.4.
(ii) Explain what this means about the distribution of returns.
(iii) Explain how mean-reversion in the stock market can be consistent with an efficient market.
(iv) Outline the claim and test of excessive volatility in stock markets made by Shiller, along with four criticisms made of the test