A) are inefficient.
B) slowly react to new information.
C) are continually reacting to new information.
D) offer tremendous arbitrage opportunities.
F) A) and C)
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A) Real asset markets are more efficient than financial markets.
B) If a market is efficient, arbitrage opportunities should be common.
C) In an efficient market, some market participants will have an advantage over others.
D) A firm will generally receive a fair price when it sells shares of stock.
F) A) and B)
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A) efficient markets in the weak form.
B) inefficient markets in the weak form.
C) efficient markets in the semi-strong form.
D) inefficient markets in the semi-strong form.
E) inefficient markets in the strong form.
G) None of the above
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A) moderate form of the efficient market hypothesis.
B) semi-strong form of the efficient market hypothesis.
C) strong form of the efficient market hypothesis.
D) weak form of the efficient market hypothesis.
F) A) and C)
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A) It measures the correlation between the current return on a security and the current return on another security.
B) It involves only one security.
C) Positive serial correlation indicates a tendency for continuation.
D) Negative serial correlation indicates a tendency toward reversal.
E) Significant positive or negative serial correlation coefficients are indicative of market inefficiency in the weak form.
G) B) and C)
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A) These results are consistent with strong from efficiency because insiders knew the league would fold.
B) These results are consistent with semi-strong form efficiency as the demise would reverse the negative cashflow.
C) These results are inconsistent with weak form efficiency because past price behavior predicted the collapse.
D) These results are inconsistent with all forms of market efficiency because a failure is a negative event.
E) These results are consistent with all forms of market efficiency as all information is known and priced in.
G) A) and B)
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A) new issues after stock price increases. This behavior is consistent with the weak form of the efficient market hypothesis.
B) new issues after stock price increases. This behavior is inconsistent with the weak form of the efficient market hypothesis.
C) new issues randomly with regard to stock price changes. This behavior is consistent with the weak form of the efficient market hypothesis.
D) new issues randomly with regard to stock price changes. This behavior is inconsistent with the weak form of the efficient market hypothesis.
F) B) and D)
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A) has more capital expenditure opportunities with positive NPVs than financing opportunities.
B) has more financing opportunities with positive NPVs than capital expenditure opportunities.
C) has about the same number of capital expenditure opportunities and financing opportunities.
D) has no opportunities for positive NPVs in either capital expenditures or in financing.
F) A) and B)
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A) semi-strong efficiency is supported.
B) the relationships are significant and can be used to predict price in the next period.
C) the correlations are small relative to both the estimation errors and transactions costs.
D) patterns exist in the data that can be exploited.
F) A) and D)
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Little happens on Day -4 through -2 an...View Answer
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Little happens on Day -4 through -2 an...View Answer
A) future stock prices are unpredictable and therefore plot past prices.
B) stock prices are in equilibrium and advise not to follow price patterns.
C) future stock prices are a reflection of the past and plot prices to find reoccurring price patterns.
D) stock prices are only predictable based on the outlook for corporations earnings.
E) SML is the most reliable predictor.
G) A) and E)
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A) -.002, -.0082, .0005
B) -.002, -.00748, .0005
C) .01, .0062, .0085
D) -.0014, -.00748, .0009
F) B) and D)
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A) inconsistent with the semi-strong efficient market hypothesis because prices should be stable.
B) inconsistent with the weak form efficient market hypothesis because all past information should be priced in.
C) consistent with the semi-strong form of the efficient market hypothesis because as new information arrives daily prices will adjust to it.
D) consistent with the strong form because prices are controlled by insiders.
F) B) and C)
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A) the random error can be predicted by past prices.
B) there is correlation between random errors period to period.
C) the random errors are unrelated from one period to the next period.
D) the expected return is not based on the security's risk.
F) All of the above
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A) new information coming to the market; being efficient the market was priced down.
B) technical difficulties in order processing.
C) the bubble theory that prices move wildly above equilibrium values and eventually fall back to equilibrium causing large losses.
D) the conspiracy theory that large institutions and rich investors control the market and caused the general population to suffer large wealth losses.
F) C) and D)
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A) do not outperform a market index. Assuming mutual fund managers rely primarily on public information, this finding refutes the semi-strong form of the efficient market hypothesis.
B) do not outperform a market index. Assuming mutual fund managers rely primarily on public information, this finding supports the semi-strong form of the efficient market hypothesis.
C) outperform a market index. Assuming mutual fund managers rely primarily on public information, this finding does not refute the semi-strong form of the efficient market hypothesis.
D) outperform a market index. Assuming mutual fund managers rely primarily on public information, this finding supports the semi-strong form of the efficient market hypothesis.
F) C) and D)
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A) all such groups has been the same over time.
B) small capitalization stocks have outperformed large capitalization stocks even after risk adjustment.
C) small capitalization stocks have under performed large capitalization stocks once adjusted for risk.
D) small and large capitalization stocks have performed equally on a risk-adjusted basis.
F) All of the above
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A) This is true because there are no differences in risk and return.
B) This is true because in an efficient stock market prices do not fluctuate.
C) This is false because professional portfolio managers prefer to generate commissions.
D) This is false because investors may not hold a desirable risk-return combination in their portfolio.
E) This is false because the markets are controlled by the institutional investors.
G) C) and E)
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The student should present a straightfor...View Answer
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