Questions from General Investment

Q: The semistrong form of the efficient market hypothesis asserts that stock prices

The semistrong form of the efficient market hypothesis asserts that stock prices: a. Fully reflect all historical price information. b. Fully reflect all publicly available information. c. Fully refle...

Q: Assume that a company announces an unexpectedly large cash dividend to its

Assume that a company announces an unexpectedly large cash dividend to its shareholders. In an efficient market without information leakage, one might expect: a. An abnormal price change at the announ...

Q: A “random walk” occurs when: a. Stock

A “random walk” occurs when: a. Stock price changes are random but predictable. b. Stock prices respond slowly to both new and old information. c. Future price changes are uncorrelated with past price...

Q: Two basic assumptions of technical analysis are that security prices adjust:

Two basic assumptions of technical analysis are that security prices adjust: a. Gradually to new information, and study of the economic environment provides an indication of future market movements. b...

Q: A convertible bond has the following features. What is its conversion

A convertible bond has the following features. What is its conversion premium? Coupon………………………………………………………… 5.25% Maturity ……………………………………………June 15, 2030 Market price of bond ……………………………………$77.50 Mark...

Q: The spot rates of interest for five U.S. Treasury

The spot rates of interest for five U.S. Treasury securities are shown in the following exhibit. Assume all securities pay interest annually. Spot Rates of Interest Term to Maturity Spot Rate of Int...

Q: Which one of the following statements about the term structure of interest

Which one of the following statements about the term structure of interest rates is true? a. The expectations hypothesis predicts a flat yield curve if anticipated future short-term rates exceed curre...

Q: The continuously compounded annual return on a stock is normally distributed with

The continuously compounded annual return on a stock is normally distributed with a mean of 20% and standard deviation of 30%. With 95.44% confidence, we should expect its actual return in any particu...

Q: Using historical risk premiums from Table 5.5 over the 1927

Using historical risk premiums from Table 5.5 over the 1927–2018 period as your guide, what would be your estimate of the expected annual HPR on the Big/Value portfolio if the current risk-free intere...

Q: During a period of severe inflation, a bond offered a nominal

During a period of severe inflation, a bond offered a nominal HPR of 80% per year. The inflation rate was 70% per year. a. What was the real HPR on the bond over the year? b. Compare this real HPR to...