3330%20Prelim%20II - Cornell University Fall 2009 Economics...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Cornell University Fall 2009 Economics 3330: Preliminary Examination II November 9, 2009 1. (12 points) True/False/Explain State whether each of the following is true or false and explain your answer. Please limit your explanations to no more than two sentences. No credit will be awarded if the explanation is incorrect. a. (3 points) Consider a two factor APT model. Suppose that the expected return on a portfolio is 10%, that the beta for the first factor is 1 and that the beta for the second factor is ½. If the risk premium for the first factor is 4%, then the risk premium on the second factor cannot also be 4%. b. (3 points) Even if investors are overconfident, markets may still be efficient. c. (3 points) “Survivorship bias” may lead to the conclusion that a mutual fund manager has outperformed the market when the manager has not actually done so. d. (3 points) The semistrong form of the efficient market hypothesis holds that accounting-based measures of a company’s valuation should not be related to the price of a company’s stock. 2.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/22/2009 for the course ECON 3330 at Cornell University (Engineering School).

Page1 / 3

3330%20Prelim%20II - Cornell University Fall 2009 Economics...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online