ch10 - Chapter 10 Investment Implications TRUE-FALSE...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 10 Investment Implications TRUE-FALSE QUESTIONS F 1. In an efficient market, expected and unexpected news should cause stock prices to move up or down. F 2. A market system that allows for quick execution of customers’ trades is said to be informationally efficient. F 3. If market prices adjust quickly after the arrival of important news surprises, it is said to be an operationally efficient market. F 4. Any consistent trend in the same direction as the price change would be evidence of an efficient market. T 5. In an efficient market, investors cannot consistently earn above average profits. T 6. A random walk means prices appear to fluctuate randomly over time, driven by the random arrival of new information. T 7. In a strong-form efficient market, all public information, both past and current, is reflected in stock prices. T 8. A weak-form efficient market is a market in which prices reflect all past information. T 9. The existence of chartists or technicians suggests that some investors believe that markets are not weak form efficient. F 10. A weak-form efficient market is one in which prices reflect all public and private knowledge, including past and current information. F 11. A semi-strong-form efficient market is one in which prices reflect all public and private knowledge, including past and current information. F 12. A strong-form efficient market is one in which prices reflect all public knowledge, including past and current information.
Background image of page 1

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

View Full DocumentRight Arrow Icon
F 13. A weak-form efficient market is one in which prices reflect all public knowledge, including past and current information. T 14. If a market is semi-strong form efficient, it also is by definition weak-form efficient. T 15. If a market is strong form efficient, it also is by definition semi-strong-form efficient. T 16. If a market is efficient, it is difficult to invest to consistently “beat the market.” T 17. A financial market is said to be information efficient if at any point the prices of securities reflect all information available to the public. F 18. The Capital Asset Pricing Model states that the expected return on an asset depends on its level of unsystematic risk. T 19. Beta measures the variability of an asset’s returns relative to the market portfolio. T 20. Beta is used to determine investor’s required rate of return on an investment. T 21. An asset’s beta can be estimated by regressing its returns against the returns for the market portfolio. T 22. A security with a beta of greater than one suggests that the asset has more than average systematic risk. T 23. The market portfolio is a portfolio that contains all risky assets. T 24. Investment involves the setting aside of funds for a period of time in order to receive expected future benefits that compensate for the time the funds are committed, the expected rate of inflation, and the uncertainty of future payments. F
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 18

ch10 - Chapter 10 Investment Implications TRUE-FALSE...

This preview shows document pages 1 - 3. Sign up to view the full document.

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