TutorialWeek8_Answers - FINS1613 BUSINESS FINANCE TUTORIAL...

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

View Full Document Right Arrow Icon
FINS1613 BUSINESS FINANCE TUTORIAL WEEK 8 Answer Guide (Based on Lecture 7, RTBWJ Chapter 10) [1] Read and ponder on possible solutions to questions under CRITICAL THINKING AND CONCEPTS REVIEW 10.3, 10.5, 10.8, 10.10 3. No, shares are riskier. Some investors are highly risk averse, and the extra possible return does not attract them relative to the extra risk. 5. The market is not weak form efficient. 8. Unlike gambling, the share market is a positive sum game; everybody can win. Also, speculators provide liquidity to markets and thus help to promote efficiency. 10. a. If the market is not weak form efficient, then this information could be acted on and a profit earned from following the price trend. Under (2), (3), and (4), this information is fully impounded in the current price and no abnormal profit opportunity exists. b. Under (2), if the market is not semi-strong form efficient, then this information could be used to buy the share “cheap” before the rest of the market discovers the financial statement anomaly. Since (2) is stronger than (1), both imply that a profit opportunity exists; under (3) and (4), this information is fully impounded in the current price and no profit opportunity exists. c
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 10/20/2011 for the course COMMERCE 3502 taught by Professor All during the One '11 term at University of New South Wales.

Page1 / 4

TutorialWeek8_Answers - FINS1613 BUSINESS FINANCE TUTORIAL...

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