Question :
97. BestFirm has a 50-year history of solid growth and ever-increasing : 1284568
97. BestFirm has a 50-year history of solid growth and ever-increasing profits. It is widely regarded as the leading firm of its industry. Hence, BestFirm’s stock:
A. should be a good buy.
B. cannot be a good buy.
C. should be a safe buy.
D. cannot be a safe buy.
98. LookGood, Inc. has just announced the bad news that its earnings have dropped by 30%. In fact, its investors had anticipated even worse results (a decrease of 40%). As a result, LookGood’s stock price:
A. increases.
B. remains the same.
C. decreases.
D. follows a random walk as usual.
99. What is the difference between a fundamental analyst and a technical analyst?
A. Only a fundamental analyst believes markets are inefficient.
B. A technical analyst focuses on financial statement analysis.
C. Only a technical analyst helps keep the market efficient.
D. A fundamental analyst analyzes such information as earnings and asset values.
100. Which of the following observations provides evidence against strong-form market efficiency?
A. Some mutual funds outperformed the market in 1997.
B. Managers trading in their own stock obtain superior returns.
C. You cannot make superior profits by trading stocks after earnings reports are issued.
D. Stock prices follow a random walk.
101. According to the semistrong form of market efficiency, when new information becomes available in the market:
A. stock prices will remain unchanged because they already reflect this information.
B. stock prices will accurately and rapidly adjust to reflect this new information.
C. stock prices will adjust to accurately reflect this new information over the course of the next few days.
D. stock prices will most likely increase because all new information has a positive effect on stock prices.
102. With respect to the notion that stock prices follow a random walk, several researchers have concluded that:
A. stock prices reflect a majority of available information about the firm.
B. successive price changes are predictable.
C. past stock price changes provide little useful information about current stock prices.
D. stock prices always rise excessively in January.
103. A company reports significantly higher earnings on a Monday. You purchase the stock on Tuesday and earn superior returns in the absence of other new information. The market appears to be:
A. weak-form efficient at best.
B. weak-form efficient at the least.
C. semistrong-form efficient at best.
D. strong-form efficient at the least.
104. Under which of the following forms of market efficiency would stock prices always reflect fair value?
A. Weak-form efficiency.
B. Semistrong-form efficiency.
C. Strong-form efficiency.
D. All of these are correct due to capital market efficiency.
105. Technical analysts are most likely to be successful in a market that is considered:
A. semistrong-form efficient.
B. not to be strong-form efficient.
C. not to be weak-form efficient.
D. to follow a random walk.
106. If the correlation of prices between two stocks is 0.35, then the price of one stock would be expected to:
A. rise when the other stock price falls.
B. rise by 35% when the other stock price is unchanged.
C. fall when the other stock price falls.
D. fall by 35% when the other stock price is unchanged.
