1. The efficient markets hypothesis implies that a. Above-market returns cannot be expected by an investor...
1. The efficient markets hypothesis implies that
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a. Above-market returns cannot be expected by an investor |
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b. Stock prices follow a random walk |
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c. Regular intramonthly patterns in stock prices cannot persist |
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d. All of the above |
2.
Which of the following affect the interest rate used to discount future cash flows?
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a. The degree of impatience or time preference on the part of surplus units |
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b. The returns that deficit units can earn on investment projects |
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c. The interaction of a and b |
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d. All of the above |
3.
Businesses
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a. Are deficit units because the profit-maximizing level of investment outlays exceeds their internally generated funds |
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b. Are deficit units because of managerial largesse |
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c. Are surplus units |
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d. None of the above |
4.
When the price of a financial asset embodies all available information bearing on its value, this reflects
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a. The Fisher effect |
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b. The term premium hypothesis |
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c. The efficient markets hypothesis |
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d. None of the above |
Homework Answers
Add Answer to:
1. The efficient markets hypothesis implies that
a. Above-market returns cannot be expected by an investor...
The efficient market hypothesis implies that..... A. efficient markets will tend to have fixed prices from...
The efficient market hypothesis implies that..... A. efficient markets will tend to have fixed prices from one day to the next B. any investment should earn a normal return commensurate with the investment's risk C. all investments should earn the same average rate of return over time D. stock prices are only efficient when all investors review their portfolios on a daily basis.
23. The efficient market hypothesis implies that markets will always reflect fair and Fequilibrium pricing. a....
23. The efficient market hypothesis implies that markets will always reflect fair and Fequilibrium pricing. a. true b. false 24. Mutual funds generally generate and distribute returns to shareholders by: a. returning fees to shareholders, share price appreciation and paying dividends b. passing on earned income, share price appreciation and distributing capital gains c. reducing fund expenses, passing on kickbacks, share price appreciation d. none of the above
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...
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.
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...
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...
Under the efficient markets hypothesis, the stock market is made efficient by O A. fiber optic...
Under the efficient markets hypothesis, the stock market is made efficient by O A. fiber optic and microwave communications technology. B. electronic exchanges. O C. competition amongst investors. O D. large, institutional traders (i.e., mutual funds). O E. high frequency traders.
Which of the following affect the interest rate used to discount future cash flows? a. The...
Which of the following affect the interest rate used to discount future cash flows? a. The degree of impatience or time preference on the part of surplus units b. The returns that deficit units can earn on investment projects c. The interaction of a and b d. All of the above
[Select all relevant.] If securities markets are strong-form efficient, then: studying historic price movements cannot earn...
[Select all relevant.] If securities markets are strong-form efficient, then: studying historic price movements cannot earn an investor a return greater than the required rate. O fundamental analysis will not find any bargains. returns greater than required rates cannot be earned except by chance, because all relevant information is already incorporated into prices.
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...
23. The efficient market hypothesis implies that markets will always reflect fair and Fequilibrium pricing. a. true b. false 24. Mutual funds generally generate and distribute returns to shareholders by: a. returning fees to shareholders, share price appreciation and paying dividends b. passing on earned income, share price appreciation and distributing capital gains c. reducing fund expenses, passing on kickbacks, share price appreciation d. none of the above
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...
Under the efficient markets hypothesis, the stock market is made efficient by O A. fiber optic and microwave communications technology. B. electronic exchanges. O C. competition amongst investors. O D. large, institutional traders (i.e., mutual funds). O E. high frequency traders.
[Select all relevant.] If securities markets are strong-form efficient, then: studying historic price movements cannot earn an investor a return greater than the required rate. O fundamental analysis will not find any bargains. returns greater than required rates cannot be earned except by chance, because all relevant information is already incorporated into prices.
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...
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