Homework Answers
Answer:
There are no Arbitrage opportunity.
Stock price follows a random walk.
Explanation:
efficient market hypothesis:
security prices already reflect all the available information.
There is no Arbitrage opportunity in a efficient market.
Efficient market approach says that past price movement, earnings report and volume traded doesn't affect stocks Current price and can't be used to predict the stocks future directions.
In simple words, past performance doesn't guarantee the future performance of the stock price moment. This is because all the available information is already taken into consideration.
In simple words, stock follows a Brownian motion that is a motion of a particle.
We also call it random walk theory.
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The following are important characteristics of market efficiency (select all that apply): Othere are no arbitrage...
Practice Question 6 The theory of market efficiency requires which of the following assumptions? Negligible transaction...
Practice Question 6
The theory of market efficiency requires which of the following
assumptions?
Negligible transaction costs.
A large number of actively traded securities.
Widely available information that is quickly translated into
share price adjustments.
All of the above.
Question 11
In an efficient market,
a. security prices react quickly to new
information.
b. security analysts will not enable investors to
realize superior returns consistently.
c. one cannot make money.
d. a and b are both correct.
Weak form market efficiency implies a) current security prices reflect all historical information and react slowly...
Weak form market efficiency implies a) current security prices reflect all historical information and react slowly to new public information. b) current security prices reflect all historical information and react slowly to new public and private information. c) current security prices reflect all historical information and react quickly to new public information. d) current security prices reflect all historical information.
The efficient market hypothesis states that current security prices will fully reflect all available information, because...
The efficient market hypothesis states that current security prices will fully reflect all available information, because in an efficient market, all unexploited profit opportunities are eliminated. The elimination of unexploited profit opportunities necessary for a financial market to be efficient does not require that all market participants be well informed. The efficient markets hypothesis implies that stock prices generally follow a random walk.
Someone who invests in the hedge funds could most accurately be described as using which approach?...
Someone who invests in the hedge funds could most accurately be described as using which approach? Multiple Choice Technical management Active management Arbitrage management Passive investment Which of the following contradicts the proposition that the stock market is semistrong-form efficient? Multiple Choice Over 25% of mutual funds outperform the market on average. Insiders earn abnormal trading profits. Applications of technical trading rules fail to earn abnormal returns. Every January, the stock market earns above-normal returns. Assume that a company announces...
a) Explain clearly the three forms of market efficiency. Why is it important for the market...
a) Explain clearly the three forms of market efficiency. Why is it important for the market to be informationally efficient? (5 marks) b) Identify and explain which forms of efficiency are adhered to and/or violated in each of the following hypothetical situations: i. A group of students has created a trading rule which appears to outperform the UK market. ii. The return on professionally managed portfolios of equities is likely to be no better than that which could be achieved...
1. Which of the following statements about the OTC market is true? A. An OTC market...
1. Which of the following statements about the OTC market is true? A. An OTC market is an organized exchange where there is a central trading location. B. OTC security transactions are made on the floor of an exchange by traders. C. Securities that are not listed on an organized exchange are bought and sold on the OTC market. D. Securities that are listed on an organized exchange are bought and sold in the OTC market. 2. Which of the...
SELECT ALL THAT APPLY PLEASE Insider trading is... A. A way to outsmart the efficient-market hypothesis....
SELECT ALL THAT APPLY PLEASE
Insider trading is... A. A way to outsmart the efficient-market hypothesis. B. An excellent investment strategy. If you know important information before everyone else, it's like betting on last night's basketball game. C. Illegal, but not many insiders get caught. OD. Using non-public information to your advantage in buying or selling stocks. E. Not something you can do unless you are a top executive (i.e., the CEO or CFO) of a major company.
please I need just the answers. no need to show working 2. Which type of risk...
please I need just the answers. no need to show
working
2. Which type of risk is faced by holders of corporate bonds that can be considered non- existent by holders of government bonds? a) foreign exchange rate risk b) inflation rate risk c) market risk d) default risk can We were unable to transcribe this image9. Which of the following statements about corporate governance is wrong? a) Corporate governance is important because it is the framework through which shareholders...
Page 256 - Writing Prompt: Ethical Framework for Hostile Takeovers In view of Maxxam's takeover of...
Page 256 - Writing Prompt: Ethical Framework for Hostile Takeovers In view of Maxxam's takeover of Pacific Lumber, do you believe that hostile takeovers are morally wrong, or could they be morally permissible or even desirable in certain circumstances? What do you think is the most important ethical objection to hostile takeovers? Explain your reasoning. Provide no less than 1 full page response to the above questions and answer each question as a separate paragraph. I want to assess your...
1.. All following elements have been identified as important to supporting school’s level of involvement with...
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Practice Question 6
The theory of market efficiency requires which of the following
assumptions?
Negligible transaction costs.
A large number of actively traded securities.
Widely available information that is quickly translated into
share price adjustments.
All of the above.
Question 11
In an efficient market,
a. security prices react quickly to new
information.
b. security analysts will not enable investors to
realize superior returns consistently.
c. one cannot make money.
d. a and b are both correct.
a) Explain clearly the three forms of market efficiency. Why is it important for the market to be informationally efficient? (5 marks) b) Identify and explain which forms of efficiency are adhered to and/or violated in each of the following hypothetical situations: i. A group of students has created a trading rule which appears to outperform the UK market. ii. The return on professionally managed portfolios of equities is likely to be no better than that which could be achieved...
SELECT ALL THAT APPLY PLEASE
Insider trading is... A. A way to outsmart the efficient-market hypothesis. B. An excellent investment strategy. If you know important information before everyone else, it's like betting on last night's basketball game. C. Illegal, but not many insiders get caught. OD. Using non-public information to your advantage in buying or selling stocks. E. Not something you can do unless you are a top executive (i.e., the CEO or CFO) of a major company.
please I need just the answers. no need to show
working
2. Which type of risk is faced by holders of corporate bonds that can be considered non- existent by holders of government bonds? a) foreign exchange rate risk b) inflation rate risk c) market risk d) default risk can We were unable to transcribe this image9. Which of the following statements about corporate governance is wrong? a) Corporate governance is important because it is the framework through which shareholders...
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