Chapter_08 Sample Questions

Chapter_08 Sample Questions - CHAPTER 08 The Efficient...

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The Efficient Market Hypothesis 1. Which of the following beliefs would not preclude charting as a method of portfolio management? a. The market is strong form efficient b. The market is semi-strong form efficient c. The market is weak form efficient d. Stock prices follow recurring patterns 2. The weak form of the EMH states that ________ must be reflected in the current stock price. a. All security price and volume data b. All publicly available information c. All information including inside information d. All costless information 3. Random price movements indicate a. Irrational markets b. That prices cannot equal fundamental values c. That technical analysis to uncover trends can be quite useful d. That markets are functioning efficiently 4. When the market risk premium rises, stock prices will ________. a. Rise b. Fall c. Recover d. Have excess volatility 5. Stock prices that are stable over time a. Indicate that prices are useful indicators of true economic value b. Indicate that the market is not incorporating new information into current stock prices c. Ensure that an economy allocates its resources efficiently d. Indicates that returns follow a random walk process 6. Which of the following is not a method employed by followers of technical analysis? a. Charting
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Chapter_08 Sample Questions - CHAPTER 08 The Efficient...

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