Ch08 - The Efficient Market Hypothesis 1. Which of the...

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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. In a 1953 study of stock prices, Maurice Kendall found that ________. a. there were no predictable patterns in stock prices b. stock prices seem to evolve randomly c. data provided no way to predict price movements
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d. all of the above 3. The weak form EMH states that ________ must be reflected in the stock price. a. all market trading data b. all publicly available information c. all information including inside information d. none of the above 4. The semi-strong form EMH states that ________ must be reflected in the stock price. a. all market trading data b. all publicly available information
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c. all information including inside information d. none of the above 5. The strong form EMH states that ________ must be reflected in the stock price. a. all market trading data b. all publicly available information c. all information including inside information d. none of the above 6. _________ considerations make portfolio management useful even in a perfectly efficient market. a. Diversification b.
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Investor tax c. Investor risk profile d. all of the above 7. When the market risk premium rises, stock prices will ________. a. rise b. fall c. recover d. have excess volatility 8. The small firm in January effect is strongest ________. a. early in the month
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b. in the middle of the month c. late in the month d. in even numbered years. 9. Evidence suggests that there may be _______ momentum and ________ reversal patterns in stock price behavior. a. short-run, short-run b. long-run, long-run c. long-run, short-run d. short-run, long run 10. Proponents of the EMH typically advocate __________.
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a. a conservative investment strategy b. a liberal investment strategy c. a passive investment strategy d. an aggressive investment strategy 11. A chartist is likely to believe in the value of doing __________. a. fundamental analysis b. technical analysis c. both a and b d. neither a nor b
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12. Which of the following is not a method employed by followers of technical analysis? a. charting b. relative strength analysis c. earnings forecasting d. All of the above are methods employed by technical analysts 13. Which of the following is not a method employed by followers of fundamental analysis? a. analysis of interest rates and other macroeconomic factors b. relative strength analysis c. earnings forecasting
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d. All of the above are methods employed by fundamental analysts 14. The primary objective of fundamental analysis is to identify __________ firms. a.
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This note was uploaded on 02/22/2012 for the course FINA 3480 taught by Professor Moore during the Spring '11 term at Toledo.

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Ch08 - The Efficient Market Hypothesis 1. Which of the...

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