Questions from General Investment


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 ava...

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Q: In an efficient market, professional portfolio management can offer all of

In an efficient market, professional portfolio management can offer all of the following benefits except which of the following? a. Low-cost diversification. b. A targeted risk level. c. Low-cost r...

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Q: Which version of the efficient market hypothesis (weak, semistrong,

Which version of the efficient market hypothesis (weak, semistrong, or strong-form) focuses on the most inclusive set of information?

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Q: “Constantly fluctuating stock prices suggest that the market does not know

“Constantly fluctuating stock prices suggest that the market does not know how to price stocks.” Respond.

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Q: a. Investors are slow to update their beliefs when given new

a. Investors are slow to update their beliefs when given new evidence. i. Disposition effect b. Investors are reluctant to bear losses due to their unconventional decisions. ii. Representativeness bia...

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Q: What is meant by data mining, and why must technical analysts

What is meant by data mining, and why must technical analysts be careful not to engage in it?

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Q: In contrast to the capital asset pricing model, arbitrage pricing theory

In contrast to the capital asset pricing model, arbitrage pricing theory: a. Requires that markets be in equilibrium. b. Uses risk premiums based on micro variables. c. Specifies the number and ide...

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

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

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Q: What is meant by “limits to arbitrage”? Give some examples

What is meant by “limits to arbitrage”? Give some examples of such limits.

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Q: Following a shock to a firm’s intrinsic value, the share price

Following a shock to a firm’s intrinsic value, the share price will slowly but surely approach that new intrinsic value. Is this view characteristic of a technical analyst or a believer in efficient m...

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