CEBS RPA 2 UPDATED 2026 QUESTIONS AND
ANSWERS RATED A+
✔✔Abnormal returns - ✔✔Not possible in a perfectly efficient market as stock prices
reflect all available information.
✔✔Cumulative forms of efficient market hypothesis - ✔✔Weak form, semistrong form,
and strong form.
✔✔Testing for weak-form efficiency - ✔✔Statistical tests for independence of stock
price changes and trading rules using past data.
✔✔Event studies - ✔✔Studies of stock returns to determine the impact of specific
events.
✔✔SEC regulation of insider trading - ✔✔Insiders must report their transactions to SEC
within two business days.
✔✔Market anomalies - ✔✔Exceptions to market efficiency that are important to study.
✔✔P/E ratio anomaly - ✔✔Securities with low P/E ratios have provided positive excess
returns.
✔✔Size effect - ✔✔Smaller firms tend to have higher positive abnormal stock returns.
✔✔January effect - ✔✔Small company stock returns are higher in January than in other
months.
✔✔Value Line Investment Survey - ✔✔Rankings contain useful information, but the
market adjusts quickly.
, ✔✔Data mining - ✔✔Search for patterns in security returns that often do not stand up to
scrutiny.
✔✔Investment company - ✔✔Company that manages a portfolio of securities for
investors
✔✔Securities and Exchange Commission (SEC) - ✔✔Regulatory agency ensuring full
disclosure of fund information
✔✔Regulated investment company - ✔✔Company that passes on earnings to
shareholders for tax purposes
✔✔Closed-end investment company - ✔✔Company that offers actively managed
portfolio of securities
✔✔Exchange-traded fund (ETF) - ✔✔Basket of stocks that tracks a particular sector or
market
✔✔Mutual fund - ✔✔Open-end investment company that does not trade on stock
exchanges
✔✔Open-end investment company - ✔✔Mutual fund that constantly issues new shares
to investors
✔✔Money market mutual funds - ✔✔Funds that invest in short-term, low-risk securities
✔✔Equity (stock) funds - ✔✔Funds that invest primarily in stocks
✔✔Bond funds - ✔✔Funds that invest primarily in bonds
✔✔Hybrid or balanced funds - ✔✔Funds that invest in both stocks and bonds
✔✔Value funds - ✔✔Funds that seek undervalued stocks based on fundamental
analysis
✔✔Growth funds - ✔✔Funds that invest in companies expected to show strong future
growth
✔✔Index funds - ✔✔Unmanaged funds that seek to match a chosen market index
✔✔Net asset value (NAV) - ✔✔Market value of a mutual fund's securities divided by
shares outstanding
✔✔Discount - ✔✔Situation where closed-end fund sells for less than its NAV
ANSWERS RATED A+
✔✔Abnormal returns - ✔✔Not possible in a perfectly efficient market as stock prices
reflect all available information.
✔✔Cumulative forms of efficient market hypothesis - ✔✔Weak form, semistrong form,
and strong form.
✔✔Testing for weak-form efficiency - ✔✔Statistical tests for independence of stock
price changes and trading rules using past data.
✔✔Event studies - ✔✔Studies of stock returns to determine the impact of specific
events.
✔✔SEC regulation of insider trading - ✔✔Insiders must report their transactions to SEC
within two business days.
✔✔Market anomalies - ✔✔Exceptions to market efficiency that are important to study.
✔✔P/E ratio anomaly - ✔✔Securities with low P/E ratios have provided positive excess
returns.
✔✔Size effect - ✔✔Smaller firms tend to have higher positive abnormal stock returns.
✔✔January effect - ✔✔Small company stock returns are higher in January than in other
months.
✔✔Value Line Investment Survey - ✔✔Rankings contain useful information, but the
market adjusts quickly.
, ✔✔Data mining - ✔✔Search for patterns in security returns that often do not stand up to
scrutiny.
✔✔Investment company - ✔✔Company that manages a portfolio of securities for
investors
✔✔Securities and Exchange Commission (SEC) - ✔✔Regulatory agency ensuring full
disclosure of fund information
✔✔Regulated investment company - ✔✔Company that passes on earnings to
shareholders for tax purposes
✔✔Closed-end investment company - ✔✔Company that offers actively managed
portfolio of securities
✔✔Exchange-traded fund (ETF) - ✔✔Basket of stocks that tracks a particular sector or
market
✔✔Mutual fund - ✔✔Open-end investment company that does not trade on stock
exchanges
✔✔Open-end investment company - ✔✔Mutual fund that constantly issues new shares
to investors
✔✔Money market mutual funds - ✔✔Funds that invest in short-term, low-risk securities
✔✔Equity (stock) funds - ✔✔Funds that invest primarily in stocks
✔✔Bond funds - ✔✔Funds that invest primarily in bonds
✔✔Hybrid or balanced funds - ✔✔Funds that invest in both stocks and bonds
✔✔Value funds - ✔✔Funds that seek undervalued stocks based on fundamental
analysis
✔✔Growth funds - ✔✔Funds that invest in companies expected to show strong future
growth
✔✔Index funds - ✔✔Unmanaged funds that seek to match a chosen market index
✔✔Net asset value (NAV) - ✔✔Market value of a mutual fund's securities divided by
shares outstanding
✔✔Discount - ✔✔Situation where closed-end fund sells for less than its NAV
