Homework Answers
If the efficient market hypothesis hold, the following statements are true:-
d) price reflect all available information
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If the efficient market hypothesis holds, which of the following statements are true? prices do not...
1. Which of the following statements regarding the efficient market hypothesis (EMH) is incorrect? A)...
1. Which of the following statements regarding the efficient market hypothesis (EMH) is incorrect? A) An efficient market is a perfect market where you cannot make large profits. B) If the market is efficient in its strong form, it reflects all available, public and private, information. The semi-strong form efficiency means that market prices reflect all publicly available information. A market that only reflects the past price and volume information is a weak-form efficient market.
True or False: The efficient markets hypothesis holds only if all investors are rational. O True...
True or False: The efficient markets hypothesis holds only if all investors are rational. O True O False Almost all financial theory and decision models assume that the financial markets are efficient. The informational efficiency of financial markets determines the ability of investors to "beat" the market and earn excess (or abnormal) returns on their investments. If the markets are efficient, they will react rapidly as new relevant information becomes available. Financial theorists have identified three levels of informational efficiency...
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.
Which of the following statements regarding the efficient market hypothesis is NOT accurate? Select one: a....
Which of the following statements regarding the efficient market hypothesis is NOT accurate? Select one: a. The strong form state prices reflect all information, including public and private b. Semi strong form Implies that fundamental analysis will not lead to abnormal returns c. If the market is weak form efficient, then investors can earn abnormal returns by trading on market information d. Strong form Implies that technical analysis will not lead to abnormal returns e. All of the answers are...
Which of the following is TRUE of efficient-market hypothesis? Since stocks are fully and fairly priced,...
Which of the following is TRUE of efficient-market hypothesis? Since stocks are fully and fairly priced, it follows that investors should not waste their time trying to find and capitalize on miss-priced (undervalued or overvalued) securities. Securities are typically in disequilibrium, meaning they are fairly priced and their expected returns are more than their required returns. At any point in time, security prices fully reflect all internal information available about the firm and its securities, and these prices are insensitive...
15. Which one of the following statements best defines the efficient market hypothesis? A. Efficient markets...
15. Which one of the following statements best defines the efficient market hypothesis? A. Efficient markets limit competition. B. Security prices in efficient markets remain steady as new information becomes available. C. Mispriced securities are common in efficient markets. D. All securities in an efficient market are zero net present value investments. E. Profits are removed as a market incentive when markets become efficient. 16.A news flash just appeared that caused about a dozen stocks to suddenly drop in value...
The efficient markets hypothesis
1: True or False: The efficient markets hypothesis holds only if all investors are rational.False2: Almost all financial theory and decision models assume that the financial markets are efficient. The informational efficiency of financial markets determines the ability of investors to “beat” the market and earn excess (or abnormal) returns on their investments. If the markets are efficient, they will react rapidly as new relevant information becomes available. Financial theorists have identified three levels of informational efficiency that reflect what...
Efficient markets hypothesis Which of the following are consistent with the efficient markets hypothesis? Check all...
Efficient markets hypothesis Which of the following are consistent with the efficient markets hypothesis? Check all that apply. Changes in stock prices can be accurately predicted by investors. Changes in stock prices are impossible to predict. Stock markets reflect all available information about the value of stocks.
Which of the following are consistent with the efficient market hypothesis? Check all that apply. It is...
Which of the following are consistent with the efficient market hypothesis? Check all that apply. It is worth hiring a financial adviser to find cheap stocks to purchase. Stock markets reflect all available information about the value of stocks. Changes in stock prices are impossible to predict.
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...
True or False: The efficient markets hypothesis holds only if all investors are rational. O True O False Almost all financial theory and decision models assume that the financial markets are efficient. The informational efficiency of financial markets determines the ability of investors to "beat" the market and earn excess (or abnormal) returns on their investments. If the markets are efficient, they will react rapidly as new relevant information becomes available. Financial theorists have identified three levels of informational efficiency...
15. Which one of the following statements best defines the efficient market hypothesis? A. Efficient markets limit competition. B. Security prices in efficient markets remain steady as new information becomes available. C. Mispriced securities are common in efficient markets. D. All securities in an efficient market are zero net present value investments. E. Profits are removed as a market incentive when markets become efficient. 16.A news flash just appeared that caused about a dozen stocks to suddenly drop in value...
Which of the following are consistent with the efficient market hypothesis? Check all that apply. It is worth hiring a financial adviser to find cheap stocks to purchase. Stock markets reflect all available information about the value of stocks. Changes in stock prices are impossible to predict.
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