Chapter Eight Test Bank Chapter Eight The Capital Markets and Market Efficiency B 1. Capital markets trade securities with a life of a. less than one year b. more than one year c. more than ten years d. more than fifteen years A 2. The most important function of the capital markets is the ___ function. a. economic b. continuous pricing c. fair price d. taxation A 3. Which function of the capital markets facilitates the flow of capital from savers to borrowers? a. Economic b. Continuous pricing c. Fair price d. Taxation B 4. Which function of the capital markets enables market participants to get accurate, up-to-date price information? a. Economic b. Continuous pricing c. Fair price d. Taxation C 5. The ______ function of the capital markets removes the fear of buying or selling at an unreasonable price. a. economic b. continuous pricing c. fair price d. taxation D 6. Fair pricing of securities is associated with the a. fair pricing theory b. separation theorem c. central limit theorem d. efficient market hypothesis 182
Chapter Eight Test Bank A 7. The “efficiency” referred to in the efficient market hypothesis is ______ efficiency. a. informational b. operational c. taxation d. inflation adjusted C 8. The weak form of the efficient market hypothesis states that _____ are of no use in predicting future stock prices. a.
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