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553 - BEAM023 and BEFM012 UNIVERSITY OF EXETER SCHOOL OF...

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BEAM023 and BEFM012 UNIVERSITY OF EXETER SCHOOL OF BUSINESS AND ECONOMICS JANUARY 2007 Fundamentals of Financial Management Financial Theory and Management Module Convenor: Professor Richard Harris Duration: TWO HOURS Answer ALL questions in Section A – all questions carry 1 mark Answer TWO questions out of four in Section B – all questions carry 30 marks Approved calculators are permitted This is a closed note paper BEAM023/BEFM012 Jan 2007
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SECTION A (Multiple Choice) Answer ALL questions in this section Each question in this section is worth 1 mark Give ONE answer only for each question Do NOT show your working 1. Which of the following statements is most correct? a. If the stock market is weak-form efficient, then information about recent trends in stock prices would be very useful when it comes to selecting stocks. b. If the stock market is semistrong-form efficient, stocks and bonds should have the same expected return. c. If the stock market is semistrong-form efficient, all stocks should have the same expected return. d. Statements a and c are correct. e. None of the statements above is correct. 2. Which of the following statements is most correct? 3. Which of the following statements is most correct? 4. In general, which of the following will tend to occur if you randomly add additional stocks to your portfolio, which currently consists of only three BEAM023/BEFM012 Jan 2007 2
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stocks?
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