Quiz 8 - Question 1 CORRECT Student response Student...

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Question 1 (1 point) Which of the following statements is CORRECT? Student response: Student Respons e Answer Choices a. The Efficient Markets Hypothesis suggests that the market does not price stocks fairly; hence, managers should make decisions based on the premise that firms' stocks are undervalued or overvalued. b . An individual who has information about past stock prices would be able to profit from this information if weak-form market efficiency exists. c. An individual who has inside information about a publicly traded company should be able to profit from this information if strong-form market efficiency exists. d . For the Efficient Markets Hypothesis to hold true, every individual investor must be "rational." e. Semistrong-form market efficiency means that stock prices reflect all public, but not necessarily all private, information. Score:1 / 1 Question 2 (1 point) Stocks X and Y sell at the same price. Stock X has a required return of 12% while Y's required return is 10%. Stock X's dividend is expected to grow at a constant rate of 6% a year, while Stock Y's dividend is expected to grow at a constant rate of 4%. If the market is in equilibrium so that expected returns equal required returns, which of the following statements is CORRECT? Student response: Student Respons e Answer Choices a. Stock X has a higher dividend yield than Stock Y.
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b . Stock Y has a higher dividend yield than Stock X. c. One year from now, Stock X's price is expected to be higher than Stock Y's price. d . Stock X has the higher expected year-end dividend. e. Stock Y has a higher capital gains yield. Score:0 / 1 Question 3 (1 point) Which of the following statements is CORRECT? Student response: Student Respons e Answer Choices a. If a market is strong-form efficient, this implies that the returns on a firm's bonds and stocks should be identical. b
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This document was uploaded on 04/29/2010.

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Quiz 8 - Question 1 CORRECT Student response Student...

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