Question :
31.Iftheefficientmarkethypothesisiscorrect,then
a.indexfundsshouldtypicallybeatmanagedfunds,andusuallydo.
b.indexfundshouldtypicallybeatmanagedfunds,butusuallydonot.
c.mutua : 1261873
31.Iftheefficientmarkethypothesisiscorrect,then
a.indexfundsshouldtypicallybeatmanagedfunds,andusuallydo.
b.indexfundshouldtypicallybeatmanagedfunds,butusuallydonot.
c.mutualfundsshouldtypicallybeatindexfunds,andusuallydo.
d.mutualfundsshouldtypicallybeatindexfunds,butusuallydonot.
32.Whichofthefollowingiscorrect?
a.Managedfundstypicallyhaveahigherreturnthanindexedfunds.Thistendstorefutetheefficientmarkethypothesis.
b.Managedfundstypicallyhaveahigherreturnthanindexedfunds.Thistendstosupporttheefficientmarkethypothesis.
c.Indexfundstypicallyhaveahigherrateofreturnthanmanagedfunds.Thistendstorefutetheefficientmarkethypothesis.
d.Indexfundstypicallyhaveahigherrateofreturnthanmanagedfunds.Thistendstosupporttheefficientmarkethypothesis.
33.Whichofthefollowingisnotconsistentwiththeefficientmarkethypothesis?
a.Stockpricesshouldfollowarandomwalk.
b.Indexfundsshouldtypicallyoutperformhighlymanagedfunds.
c.Newshasnoeffectonstockprices.
d.Thereislittlepointinspendingmanyhoursstudyingthebusinesspageslookingforundervaluedstocks.
34.Accordingtotheefficientmarketshypothesis,whichofthefollowingwouldincreasethepriceofstockintheSimpsonCorporation?
a.Simpsonannounces,justaseveryonehadexpected,thatithashiredanewhighlyrespectedCEO.
b.Simpsonannouncesthatitsprofitswerelow,butnotaslowasthemarkethadexpected.
c.AnalysisbyacolumninabusinessweeklyindicatesthatSimpsonisovervalued.
d.Alloftheabovewouldincreasetheprice.
35.SupposethatinterestratesunexpectedlyriseandthatFineLineCorporationannouncesthatrevenuesfromlastquarterweredownbutnotasmuchasthepublichadanticipatedtheywouldbedown.Accordingtotheefficientmarketshypothesis,whichofthethesethingsmakethepriceofFineLineCorporationStockfall?
a.boththeinterestraterisingandtherevenueannouncement
b.neithertheinterestraterisingnortherevenueannouncement
c.onlytheinterestraterising
d.onlytherevenueannouncement
36.FundamentalanalysisshowsthatQuadrangleCompanyisfairlyvalued.ThenQuadrangleCompanyunexpectedlyimprovesitsproductiontechniquesandunexpectedlyhiresanewCEOawayfromanotherverysuccessfulcompetitor.SupposethishasnoeffectonthepriceofthestockofQuadrangleCompany.
a.Fundamentalanalysiswouldnowshowthecorporationisovervalued.Thefactthatthepricewasunchangedisconsistentwiththeefficientmarketshypothesis.
b.Fundamentalanalysiswouldnowshowthecorporationisovervalued.Thefactthatthepricewasunchangedisnotconsistentwiththeefficientmarketshypothesis.
c.Fundamentalanalysiswouldnowshowthecorporationisundervalued.Thefactthatthepricewasunchangedisconsistentwiththeefficientmarketshypothesis.
d.Fundamentalanalysiswouldnowshowthecorporationisundervalued.Thefactthatthepricewasunchangedisnotconsistentwiththeefficientmarketshypothesis.
37.Inthe1990s,FedChairpersonAlanGreenspanquestionedwhetherthestockmarket
a.boomatthattimereflected“irrationalexuberance.”
b.declineatthattimereflected“irrationalfunk.”
c.boomatthattimereflected“rationalexuberance.”
d.declineatthattimereflected“rationalfunk.”
38.Inthe1990s,FedChairAlanGreenspanbelievedthatthemarketwas
a.undervalued,andevidencelatershowedthatthiswasclearlycorrect.
b.undervalued,butwhetheritwasremainsdebatable.
c.overvalued,andevidencelatershowedthatthiswasclearlycorrect.
d.overvalued,butwhetheritwasremainsdebatable.
39.Whichofthefollowingisnotcorrect?
a.Thereisagreaterreductioninriskbyincreasingthenumberofstocksinaportfoliofrom1to10,thanbyincreasingitfrom100to120stocks.
b.Thehistoricalrateofreturnonstockshasbeenabout5percentagepointshigherthanthehistoricalrateofreturnonbonds.
c.Stockinanindustrythatisverysensitivetoeconomicconditionsislikelytohaveahigheraveragereturnthanstockinanindustrythatisnotsosensitivetoeconomicconditions.
d.Ifyouhadinformationaboutacorporationthatnooneelsehad,youcouldearnaveryhighrateofreturn.Thiscontradictstheefficientmarkethypothesis.
40.Whichofthefollowingiscorrectconcerningstockmarketirrationality?
a.Bubblescouldarise,inpart,becausethepricethatpeoplepayforstockdependsonwhattheythinksomeoneelsewillpayforitinthefuture.
b.Economistsalmostallagreethattheevidenceforstockmarketirrationalityisconvincingandthedeparturesfromrationalpricingareimportant.
c.Someevidencefortheexistenceofmarketirrationalityisthatinformedandpresumablyrationalmanagersofmutualfundsgenerallybeatthemarket.
d.Alloftheabovearecorrect.