Questions from General Investment

Q: Kaskin, Inc., stock has a beta of 1.2

Kaskin, Inc., stock has a beta of 1.2 and Quinn, Inc., stock has a beta of .6. Which of the following statements is most accurate? a. The expected rate of return will be higher for the stock of Kaskin...

Q: Orb Trust (Orb) has historically leaned toward a passive management

Orb Trust (Orb) has historically leaned toward a passive management style of its portfolios. The only model that Orb’s senior management has promoted in the past is the capital asset pricing model (CA...

Q: If markets are efficient, what should be the correlation coefficient between

If markets are efficient, what should be the correlation coefficient between stock returns for two nonoverlapping time periods?

Q: Which of the following sources of market inefficiency would be most easily

Which of the following sources of market inefficiency would be most easily exploited? a. A stock price drops suddenly due to a large sale by an institution. b. A stock is overpriced because traders ar...

Q: a. Explain the likely impact on the offering yield of adding

a. Explain the likely impact on the offering yield of adding a call feature to a proposed bond issue. b. Explain the likely impact on the bond’s expected life of adding a call feature to a proposed bo...

Q: Suppose that, after conducting an analysis of past stock prices,

Suppose that, after conducting an analysis of past stock prices, you come up with the following observations. Which would appear to contradict the weak form of the efficient market hypothesis? Explain...

Q: Which of the following statements are true if the efficient market hypothesis

Which of the following statements are true if the efficient market hypothesis holds? a. It implies that future events can be forecast with perfect accuracy. b. It implies that prices reflect all avail...

Q: Suppose you find that prices of stocks before large dividend increases show

Suppose you find that prices of stocks before large dividend increases show on average consistently positive abnormal returns. Is this a violation of the EMH?

Q: An index model regression applied to past monthly returns in Ford’s stock

An index model regression applied to past monthly returns in Ford’s stock price produces the following estimates, which are believed to be stable over time: rF = .10% + 1.1rM If the market index subs...

Q: In a recent closely contested lawsuit, Apex sued Bpex for patent

In a recent closely contested lawsuit, Apex sued Bpex for patent infringement. The jury came back today with its decision. The rate of return on Apex was rA = 3.1%. The rate of return on Bpex was only...