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Conceptual suppose that you found evidence

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7.(Conceptual) Suppose that you found evidence contradicting weak form efficiency. Whymight this persist?A.It is too large to take advantage ofB.You actually found a new risk factor (two explanations for this: value/profitpotential is too small relative to trading costs needed or model is incorrect makingit a previously unknown risk factor)C.Your trading makes it worseD.All of theseE.None of these15
8.(Conceptual) We argued that the market is efficient for a “regular”person. Given this, which of the following isNOTa valid reason forthem to pay attention to their portfolio?
9.(Conceptual) We argued that the market is generally efficient for“regular” people. Which of the following is a reason why they mightchoose to still pay attention to their portfolio?
10. (Conceptual) Why might a mispricing we find persist through time?
11.(Conceptual) Why might a mispricing we identified persistthrough time?A.It is actually a risk factorB.It is too small for investors to take advantage ofC.Not all investors behave rationallyD.All of these are reasons that a mispricing might persistE.None of these are reasons that a mispricing might persist
CH. 3: Behavioral FinanceRepresentativeness16
1.(Conceptual) A blog that you follow recently added a weekly stockpick post. You see that every pick thus far has been very successful,with a significant bump occurring in the days afterward. You figurethat this will continue, and so you choose to immediately buy thenext recommendation as soon as you read the post. What bias mightthis be an example of?

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Term
Fall
Professor
Staff
Tags
Behavioral Finance, Efficient market hypothesis, Random walk hypothesis

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