Statements is true about the efficient market hypothesis

Assignment Help Financial Management

Reference no: EM132033942

For each question, select the correct answer then briefly in one or two sentences explain the ratoniale beyond the answer.

(1) Which of the following contradicts the proposition that the stock market is weakly efficient?

(A) An analyst is able to identify mispriced stocks by looking at stock charts.

(B) Mutual funds do not outperform the market on average.

(D) The autocorrelations of stock returns are not significantly different from zero

(2) Which of the following would provide the strongest evidence against the semi-strong form of the efficient market theory?

(A) Fundamental analysis does not help generate abnormal returns.

(B) Technical analysis is worthless in identifying mispriced stocks.

(D) Mutual fund managers do not beat the market on average.

(3) A random walk occurs when

(A) Stock price changes are random but predictable.

(B) Stock prices respond slowly to both new and old information.

(D) Future price changes are uncorrelated with past price changes

(4) Which of the following statements is true about the efficient market hypothesis?

(A) It implies a rational market.

(B) It implies that everyone makes zero profit from trading.

(D) It implies that prices do not fluctuate.

Reference no: EM132033942

Questions Cloud

How much would the company afn be reduced : Sales are expected to grow by 14% next year and the CFO wants to lower the DSO to the industry average of 42 days.

Withdraw from the fund to purchase car : how much did John’s parents allow him to withdraw from the fund to purchase his car?

Interest rate implied by spot and futures prices of bonds : What is the 1-year interest rate implied by the spot and futures prices of bonds? What hedging strategy would you recommend to him?

What should management do to recuse the cost of capital : What should management do to recuse the cost of capital? Why would that be successful?

Statements is true about the efficient market hypothesis : Which of the following statements is true about the efficient market hypothesis?

Net income to the controlling and noncontrolling interests : determine the proper allocation of consolidated net income to the controlling and noncontrolling interests?

Sensitivity of the npv to changes in the price of new clubs : McGilla Golf has decided to sell a new line of golf clubs. What is the sensitivity of the NPV to changes in the price of the new clubs?

What will be his holding period return if the firm defaults : What will be his holding period return if Risky Corp. does not default? What will be his holding period return if the firm defaults?

Find mispriced securities will make markets more efficient : The competition of trying to be the first to find mispriced securities will make markets more efficient. Do you agree with Mark? Why or why not?

User Account

All Pages