51.Theefficientmarketshypothesisimpliesthat a.buildinga portfolio based on a published list ofthe“mostrespected”companiesislikelytoproduceabetterthan-averagereturn. b.ifastockroseinpricelastyear,itislikelytoriseinpricethisyear. c.managedmutualfundsshouldgenerallyoutperformindexedmutualfunds. d.Noneoftheabovearecorrect. 52.Theefficientmarketshypothesissaysthatbeatingthemarketconsistentlyis a.impossible.Manystudiesfindthatbeatingthemarketis,atbest,extremelydifficult. b.impossible.Manystudiesfindthatbeatingthemarketisrelativelyeasy. c.relativelyeasy.Manystudiesfindthatbeatingthemarketis,atbest,extremelydifficult. d.relativelyeasy.Manystudiesfindthatbeatingthemarketisrelativelyeasy. 53.Ifyouareconvincedthatstockpricesareimpossibletopredictfromavailableinformation,thenyouprobablyalsobelievethat a.theefficientmarketshypothesisisnotacorrecthypothesis. b.thestockmarketisinformationallyefficient. c.thestockmarketisinformationallyinefficient. d.thereisnoreasontoestablishadiversifiedportfolioofstocks. 54.Apersonwhobelievesstronglyintheuseoffundamentalanalysistochooseaportfolioofstocks a.hasabetterchanceofoutperformingthemarketifstockpricesfollowarandomwalkthaniftheydonotfollowarandomwalk. b.almostalwayschoosestoholdindexfundsinhisorherportfolioratherthanactively-managedfunds. c.isspendinghisorhertimewiselyiftheefficientmarketshypothesisiscorrect. d.isinterestedinthelikelyabilityofacorporationtopaydividendsinthefuture. 55.Whichofthefollowingmethodsofpickingstocksisnotconsistentwithfundamentalanalysis? a.doingresearchsuchasthoroughlyreadingandanalyzingcompanies’annualreports b.choosingmutualfundsthataremanagedbyindividualswithgoodreputations c.viewingindividualstockpricesasunpredictable d.relyingupontheadviceofWallStreetanalysts 56.Theavailableevidenceindicatesthat a.aboutone-halfofallmanagersofactivemutualfundsconsistentlyoutperformindexfunds. b.outperformingthemarketonaconsistentbasisisextremelydifficulttodo. c.thereislittletruthtothenotionthatthereisatrade-offbetweenriskandreturn. d.thereislittletruthtotheefficientmarketshypothesis. 57.Theword“efficient”intheterm“efficientmarketshypothesis”referstotheideathat a.fundamentalanalysisisanefficientwaytogoaboutchoosingwhichstockstobuyorsell. b.stockpricesmoveupwardanddownward“efficiently,”ratherthanfollowinga“randomwalk.” c.thestockmarketis“informationallyefficient.” d.companiesemployofficersandmanagerswhoarewell-qualifiedtoperformtheirjobs. 58.Apharmaceuticalcompanyunexpectedlyannouncesthatitjustdevelopedanimportantnewdrug.Thisnewsshould a.raisethepriceofthecorporation’sstock;ifitdoesnotthestockisovervalued. b.raisethepriceofthecorporation’sstock;ifitdoesnotthestockisundervalued. c.reducethepriceofthecorporation’sstock;ifitdoesnotthestockisovervalued. d.reducethepriceofthecorporation’sstock;ifitdoesnotthestockisundervalued. 59.Ifyourresearchleadsyoutobelievethatthepresentvalueofastock’sdividendstreamandfuturepriceislessthan a.overvaluedsoyoushouldconsiderbuyingit. b.overvaluedsoyoushouldnotconsiderbuyingit. c.undervaluedsoyoushouldconsiderbuyingit. d.undervaluedsoyoushouldnotconsiderbuyingit. 60.Ifunexpectednewsraisedpeople’sexpectationsofacorporation’sfuturedividendsandprice,thenbeforethepricechangesthiscorporation’sstockwouldbe a.overvalued,soitspricewouldrise. b.overvalued,soitspricewouldfall. c.undervalued,soitspricewouldrise. d.undervalued,soitspricewouldfall.