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Exam Question
Tests of market efficiency have focused on…
- 1. the mean-variance efficiency of the selected market proxy
- 2. strategies that would have provided superior risk-adjusted returns
- 3. results of actual investments of professional managers
- 4. B and C
- 5. A and B
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Exam Question
According to the efficient market hypothesis:
- 1. High-beta stocks are consistently overpriced
- 2. Low-beta stocks are consistently overpriced
- 3. Positive alpha on stocks will quickly disappear
- 4. Negative alpha stocks consistently yield low return for arbitrageurs
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Exam Question
Statman (1977) argues that…is consistent with some investors’ irrational preference for stocks with high cash dividends and with a tendency to hold losing positions too long.
- 1. mental accounting
- 2. regret avoidance
- 3. overconfidence
- 4. conservatism
- 5. none of the above
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Practice set and Exam Quiz
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Exam Question
…bias means that investors are too slow in updating their beliefs in response to evidence.
- 1. framing
- 2. regret avoidance
- 3. overconfidence
- 4. conservatism
- 5. none of the above
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Practice set and Exam Quiz
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Exam Question
Assume the U.S. government was to decide to increase the budget deficit. This action will most likely cause…to increase.
- 1. interest rates
- 2. government borrowing
- 3. unemployment
- 4. both A and B
- 5. none of the above
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Practice set and Exam Quiz
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Exam Question
According to the efficient markets view, value stocks earn higher expected return than growth stocks because:
- 1. Value stocks are riskier than growth stock
- 2. Value stocks are less risky than growth stock
- 3. Value stocks have higher expected future payoffs than growth stock
- 4. Value stocks have lower expected future payoffs than growth stock
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Practice set and Exam Quiz
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Exam Question
Forecasting errors are potentially important because
- 1. research suggests that people underweight recent information
- 2. research suggests that people overweight recent information
- 3. research suggests that people correctly weight recent information
- 4. either A or B depending on whether the information was good or bad
- 5. none of the above
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Practice set and Exam Quiz
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Exam Question
DeBondt and Thaler believe that high P/E result from investors
- 1. earnings expectations that are too extreme
- 2. earnings expectations that are not extreme enough
- 3. stock price expectations that are too extreme
- 4. stock price expectations that are not extreme enough
- 5. none of the above
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Practice set and Exam Quiz
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Exam Question
Assume that a company is announcing an unexpectedly large dividend to its shareholders. In an efficient market without information leakage, one might expect:
- 1. An abnormal price change at the announcement
- 2. An abnormal price change before the announcement
- 3. An abnormal price change after the announcement
- 4. No abnormal price change before or after the announcement
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Practice set and Exam Quiz
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Exam Question
…is a measure of the extent to which a movement in the market index is reflected in the price movements of all stocks in the market.
- 1. put-call ratio
- 2. trin ratio
- 3. Breadth
- 4. confidence index
- 5. all of the above
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Practice set and Exam Quiz
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Exam Question
Arbel (1985) found that:
- 1. The January effect was highest for neglected firms
- 2. The book-to-market value ratio effect was highest in January
- 3. The liquidity effect was highest for small firms
- 4. The neglected firm effect was independent of the small firm effect
- 5. Small firms had higher book-to-market value ratios
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Practice set and Exam Quiz
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Exam Question
Arbitrageurs may be unable to exploit behavioral biases due to…
I) fundamental risk
II) implementation costs
III) model risk
IV) conservatism
V) regret avoidance
- 1. I and II only
- 2. I, II, and III
- 3. I, II, III, and V
- 4. II, III, and IV
- 5. IV and V
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Practice set and Exam Quiz
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Exam Question
Which of the following indexes of economic indicators are leading indicators:
a. Average weekly hours of production workers
b. Employees on non-agricultural payrolls
c. Personal income less transfer payments
d. Manufacturer’s new orders (consumer goods and materials industries)
- 1. Only b) and c)
- 2. Only a) and d)
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Practice set and Exam Quiz
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Exam Question
A “random walk” occurs when:
- 1. Stock price changes are random but predictable
- 2. Stock prices respond slowly to both new and old information
- 3. Future price changes are uncorrelated with the past price changes
- 4. Past information is useful in predicting future prices
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Practice set and Exam Quiz
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Exam Question
If a person gives too much weight to recent information compared to prior beliefs, they would make…errors.
- 1. framing
- 2. selection bias
- 3. overconfidence
- 4. conservatism
- 5. forecasting
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Practice set and Exam Quiz
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Exam Question
The anomalies literature…
- 1. provides a conclusive rejection of market efficiency
- 2. provides a conclusive support of market efficiency
- 3. suggests that several strategies would have provided superior returns
- 4. A and C
- 5. none of the above
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Practice set and Exam Quiz
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Exam Question
The efficient market hypothesis…
- 1. implies that security prices properly reflect information available to investors
- 2. has little empirical validity
- 3. implies that active traders will find it difficult to outperform a buy-and-hold strategy
- 4. B and C
- 5. A and C
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Practice set and Exam Quiz
Yes! You can do Online MCQ practice of Behavioral Finance question set and give online exam quiz test for Behavioral Finance, so you can check your knowledge. You can get MCQ Study and Exam link from home page.
Exam Question
If all securities are fairly priced (relative to the intrinsic, or true, value) an arbitrage opportunity…exist
- 1. Must
- 2. Might
- 3. Must not
- 4. Non of the above
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Practice set and Exam Quiz
Yes! You can do Online MCQ practice of Behavioral Finance question set and give online exam quiz test for Behavioral Finance, so you can check your knowledge. You can get MCQ Study and Exam link from home page.
Exam Question
Circle all true statements. According to the behavioral finance view of the financial market:
- 1. Investors sentiment may move stocks prices away from the fundamental values
- 2. Arbitrage forces cannot always correct the mis-valuations generated by investors sentiment
- 3. Arbitrage forces can never correct the mis-valuations generated by investors sentiment
- 4. Prices are not likely to be more inefficient for stocks with higher arbitrage costs
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Practice set and Exam Quiz
Yes! You can do Online MCQ practice of Behavioral Finance question set and give online exam quiz test for Behavioral Finance, so you can check your knowledge. You can get MCQ Study and Exam link from home page.
Exam Question
Some economists believe that the anomalies literature is consistent with investors…and…
- 1. ability to always process information correctly and therefore they infer correct probability distributions about future rates of return; given a probability distribution of returns, they always make consistent and optimal decisions
- 2. inability to always process information correctly and therefore they infer incorrect probability distributions about future rates of return; given a probability distribution of returns, they always make consistent and optimal decisions
- 3. ability to always process information correctly and therefore they infer correct probability distributions about future rates of return; given a probability distribution of returns, they often make inconsistent or suboptimal decisions
- 4. inability to always process information correctly and therefore they infer incorrect probability distributions about future rates of return; given a probability distribution of returns, they often make inconsistent or suboptimal decisions
- 5. none of the above
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Practice set and Exam Quiz
Yes! You can do Online MCQ practice of Behavioral Finance question set and give online exam quiz test for Behavioral Finance, so you can check your knowledge. You can get MCQ Study and Exam link from home page.
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