1. Do you think that the financial markets are efficient?
2. Do you know any evidence about market inefficiencies?
3. Toyota Corp.'s stock is $35 per share. Its expected return is 20% and variance is 10%.
Honda Corp.'s stock is $18 per share. Its expected return is 18% and variance is 9%.
Benz Corp.'s stock is $50 per share. Its expected return is 11% and variance 5%.
What would be the expected return of a portfolio consisting of 50% Toyota and 50% Honda?