Questions from General Investment

Q: We know that the market should respond positively to good news and

We know that the market should respond positively to good news and that good-news events such as the coming end of a recession can be predicted with at least some accuracy. Why, then, can we not predi...

Q: You know that firm XYZ is very poorly run. On a

You know that firm XYZ is very poorly run. On a scale of 1 (worst) to 10 (best), you would give it a score of 3. The market consensus evaluation is that the management score is only 2. Should you buy...

Q: Good News, Inc., just announced an increase in its annual

Good News, Inc., just announced an increase in its annual earnings, yet its stock price fell. Is there a rational explanation for this phenomenon?

Q: “If all securities are fairly priced, all must offer equal

“If all securities are fairly priced, all must offer equal expected rates of return.” Comment.

Q: Steady Growth Industries has never missed a dividend payment in its 94

Steady Growth Industries has never missed a dividend payment in its 94-year history. Does this make it more attractive to you as a possible purchase for your stock portfolio?

Q: a. An investment in a coupon bond will provide the investor

a. An investment in a coupon bond will provide the investor with a return equal to the bond’s yield to maturity at the time of purchase if: i. The bond is not called for redemption at a price that ex...

Q: Which of the following (hypothetical) observations would most contradict the

Which of the following (hypothetical) observations would most contradict the proposition that the stock market is weakly efficient? Explain. a. Over 25% of mutual funds outperform the market on averag...

Q: What do we mean by fundamental risk, and why may such

What do we mean by fundamental risk, and why may such risk allow behavioral biases to persist for long periods of time?

Q: Even if prices follow a random walk, they still may not

Even if prices follow a random walk, they still may not be informationally efficient. Explain why this may be true and why it matters for the efficient allocation of capital.

Q: Use the data from The Wall Street Journal in Figure 12.

Use the data from The Wall Street Journal in Figure 12.5 to calculate the trin ratio for the NASDAQ. Is the trin ratio bullish or bearish?