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| 1 | |
If you believe in the ________ form of the EMH, you believe that stock prices reflect all relevant information including historical stock prices and current public information about the firm, but not information that is available only to insiders. |
| | A) | semistrong |
| | B) | strong |
| | C) | weak |
| | D) | A, B, and C |
| | E) | none of the above |
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| 2 | |
Proponents of the EMH typically advocate |
| | A) | an active trading strategy. |
| | B) | investing in an index fund. |
| | C) | a passive investment strategy. |
| | D) | A and B |
| | E) | B and C |
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| 3 | |
__________ focus more on past price movements of a firm's stock than on the underlying determinants of future profitability. |
| | A) | Credit analysts |
| | B) | Fundamental analysts |
| | C) | Systems analysts |
| | D) | Technical analysts |
| | E) | All of the above |
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| 4 | |
_________ above which it is difficult for the market to rise. |
| | A) | A book value is a value |
| | B) | A resistance level is a value |
| | C) | A support level is a value |
| | D) | A and B |
| | E) | A and C |
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| 5 | |
The debate over whether markets are efficient will probably never be resolved because of ________. |
| | A) | the lucky event issue |
| | B) | the magnitude issue |
| | C) | the selection bias issue |
| | D) | all of the above |
| | E) | none of the above |
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| 6 | |
Basu (1977, 1983) found that firms with low P/E ratios |
| | A) | earned higher average returns than firms with high P/E ratios. |
| | B) | earned the same average returns as firms with high P/E ratios. |
| | C) | earned lower average returns than firms with high P/E ratios. |
| | D) | had higher dividend yields than firms with high P/E ratios. |
| | E) | none of the above |
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| 7 | |
Studies of positive earnings surprises have shown that there is |
| | A) | a positive abnormal return on the day positive earnings surprises are announced. |
| | B) | a positive drift in the stock price on the days following the earnings surprise announcement. |
| | C) | a negative drift in the stock price on the days following the earnings surprise announcement. |
| | D) | both A and B |
| | E) | both A and C |
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| 8 | |
In an efficient market, __________. |
| | A) | security prices react quickly to new information |
| | B) | security prices are seldom far above or below their justified levels |
| | C) | security analysis will not enable investors to realize superior returns consistently |
| | D) | one cannot make money |
| | E) | A, B, and C |
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| 9 | |
Google has a beta of 1.0. The annualized market return yesterday was 11%, and the risk-free rate is currently 5%. You observe that Google had an annualized return yesterday of 14%. Assuming that markets are efficient, this suggests that |
| | A) | bad news about Google was announced yesterday. |
| | B) | good news about Google was announced yesterday. |
| | C) | no news about Google was announced yesterday. |
| | D) | interest rates rose yesterday. |
| | E) | interest rates fell yesterday. |
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| 10 | |
Chartists practice |
| | A) | technical analysis. |
| | B) | fundamental analysis. |
| | C) | regression analysis. |
| | D) | insider analysis. |
| | E) | psychoanalysis. |
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