Question

odern portfolio theory was originally advanced by: a. Harry Markowitz and the identification of standard deviat b. William Sharpe and the capital asset pricing model. c. Eugene Fama and the efficient markets hypothesis. d. Stephen Ross and the arbitrage pricing theory. standard deviation as a measure of risk. Harold Smith sits on four boards of dire different industry. Smith has an ethi on tour boards of directors of mublicly held companies, each operating in a lause in each of his board contracts but ignores them bove any relevant benchmark. The market under these y trading on information he learns during board meetings. Smith Ben he learns during board meetings. Smith generates an average return on these trades that is well above any relevant benchmar conditions is most likely: a. Inefficient. b. Weak form efficient. c. Semi-strong form efficient. d. Strong form efficient. market in which an investor forms a well-diversified portfolio by using only the CEO's Kegree and university attended to consistently outperform the relevant benchmark is most likely a. Inefficient. b. Weak form efficient. c. Semi-strong form efficient. d. Strong form efficient. Information reflected in security prices in a semi-strong form market most likely include a. Private information regarding the merger of industry leaders. b. Dividend information contained in the board of director announcement. c. Stock prices during the previous week. d. Board of director election results one week after the election. An investor uses fundamental analysis to form a portfolio of equity securities. The portfolio has outperformed its benchmark for a period of almost a decade. The market under these conditions is most likely: a. Inefficient. b. Weak form efficient. c. Semi-strong form efficient. d. Strong form efficient.

Answer 1

1]

(a) is the correct option. MPT was originally advanced by Harry Markowitz. He identified standard deviation as a measure of risk

2]

(c) - Semi-strong form efficient.

In a semi-strong form efficient, only material non-public information can be used to earn an excess return. In this case, Harold is using inside information to earn an excess return.