FINA 5320 Exam Questions with Correct
Answers
An investor discovers that stock prices change drastically as a result of certain events.
This finding is a violation of:
A. the moderate form of the efficient market hypothesis.
B. the semistrong form of the efficient market hypothesis.
C. the strong form of the efficient market hypothesis.
D. the weak form of the efficient market hypothesis.
E. no form of market efficiency but rather an indication of an efficient market.
no form of market efficiency but rather an indication of an efficient market.
If a market is strong form efficient then:
A. company insiders are the only investors capable of earning an abnormal profit.
B. abnormal profits are obtainable by any and all investors.
C. technical analysts who study past market performance have a market advantage.
D. all investments should have positive NPVs.
E. company insiders have no advantage over John Q. Public investor.
company insiders have no advantage over John Q. Public investor.
The market price of a stock tends to fluctuate throughout every trading day. The
fluctuation is:
A. inconsistent with the semistrong form of the efficient market hypothesis because
prices should be stable.
, B. inconsistent with the weak form of the efficient market hypothesis because all past
information should already be included in the price.
C. consistent with the semistrong form of efficient market hypothesis because daily
prices should adjust as new information becomes available.
D. consistent with the string form of market efficiency because prices are controlled by
insiders.
E. a strong indicator that abnormal profits can be realized.
consistent with the semistrong form of efficient market hypothesis because daily prices
should adjust as new information becomes available.
An overconfident investor will tend to:
A. trade primarily in securities from their local area.
B. trade less frequently than an average investor.
C. underperform due to excess trading.
D. suffer from the disposition effect.
E. underestimates their ability to pick a winning stock.
underperform due to excess trading.
If financial markets are efficient, then attempting to accurately predict interest rates is:
A. an endeavor best left to corporate executives.
B. a relatively easy and accurate exercise.
C. a waste of good time.
D. relatively easy to do if you have a general understanding of finance and economics.
E. a little tricky but wise managers tend to succeed at it on an ongoing basis.
Answers
An investor discovers that stock prices change drastically as a result of certain events.
This finding is a violation of:
A. the moderate form of the efficient market hypothesis.
B. the semistrong form of the efficient market hypothesis.
C. the strong form of the efficient market hypothesis.
D. the weak form of the efficient market hypothesis.
E. no form of market efficiency but rather an indication of an efficient market.
no form of market efficiency but rather an indication of an efficient market.
If a market is strong form efficient then:
A. company insiders are the only investors capable of earning an abnormal profit.
B. abnormal profits are obtainable by any and all investors.
C. technical analysts who study past market performance have a market advantage.
D. all investments should have positive NPVs.
E. company insiders have no advantage over John Q. Public investor.
company insiders have no advantage over John Q. Public investor.
The market price of a stock tends to fluctuate throughout every trading day. The
fluctuation is:
A. inconsistent with the semistrong form of the efficient market hypothesis because
prices should be stable.
, B. inconsistent with the weak form of the efficient market hypothesis because all past
information should already be included in the price.
C. consistent with the semistrong form of efficient market hypothesis because daily
prices should adjust as new information becomes available.
D. consistent with the string form of market efficiency because prices are controlled by
insiders.
E. a strong indicator that abnormal profits can be realized.
consistent with the semistrong form of efficient market hypothesis because daily prices
should adjust as new information becomes available.
An overconfident investor will tend to:
A. trade primarily in securities from their local area.
B. trade less frequently than an average investor.
C. underperform due to excess trading.
D. suffer from the disposition effect.
E. underestimates their ability to pick a winning stock.
underperform due to excess trading.
If financial markets are efficient, then attempting to accurately predict interest rates is:
A. an endeavor best left to corporate executives.
B. a relatively easy and accurate exercise.
C. a waste of good time.
D. relatively easy to do if you have a general understanding of finance and economics.
E. a little tricky but wise managers tend to succeed at it on an ongoing basis.
