practice_final_2 - AFM 372 Fall 2007 Quiz #1 Version B,...

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AFM 372 Fall 2007 Quiz #1 Version B , Sept. 27 Duration: 25 m Student name: _________________ Student number: ______________ I. Multiple choice questions: Circle one answer that is the best. (2 points each) 1. If the efficient market hypothesis holds investors should expect: A) to receive a fair price for their securities. B) to earn zero abnormal return. C) always be able to pick stocks that will outperform the market averages. D) Both a & b. E) Both b & c. 2. The Knot Knit Corporation needs to elect 7 directors. There are 100,000 shares outstanding. Under cumulative voting, at least how many shares would you need to own to guarantee that your favorite candidate is elected? A) 50,001 B) 50,000 C) 12,501 D) 12,500 E) 14,286 II. Short answer question (3 points. Directly copying from notes may result in lower mark. Your answer must not exceed 4 sentences or it will result in loss of mark.) Is the following hypothetical “facts” a violation of the efficient market hypothesis? If inconsistent with market efficiency, which version of efficiency would be violated? Give
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This note was uploaded on 06/15/2008 for the course AFM 372 taught by Professor Na during the Fall '07 term at University of Texas at Austin.

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practice_final_2 - AFM 372 Fall 2007 Quiz #1 Version B,...

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