Exam 16: Capital Market Efficiency

Company insiders of XYZ consistently purchase shares of their company prior to increases in the share price and sell shares before decreases in the share price.Which of the following answers is consistent with the aforementioned observation?

(Multiple Choice)

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Question 21

The January effect in Australia is explained by:

(Multiple Choice)

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Question 22

Returns greater or less than those which the market expects from a security are known as:

(Multiple Choice)

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Question 23

Gold Ltd made an unexpected announcement at 11 am that a new gold mine had been discovered.The share price established in the last trade before the announcement was 37 cents.The first trade after the announcement was also at 37 cents but the following trade took place at 52 cents,which became the new established price.With regards to the second trade after the announcement:

(Multiple Choice)

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Question 24

Fama and French (1992)found that companies with a low book-to-market ratio tended to earn ___ returns,while companies with a high book-to-market ratio tended to earn _ returns.

(Short Answer)

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Question 25

Briefly,what are the implications of the EMH for: A)financial managers? B)investors in securities?

(Essay)

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Question 26

According to Shleifer (2000),the theoretical foundation of the efficient markets hypothesis is:

(Multiple Choice)

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Question 27

______________ analysis is the use of historical prices to detect trends that can be used to predict the future short-term course of prices.

(Short Answer)

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Question 28

Fundamental analysis suggests that sometimes the market is short-sighted and a share price cannot be justified based on the fundamental features of the company.

(True/False)

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Question 29

An efficient capital market is one in which:

(Multiple Choice)

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Question 30

Boom Ltd made an announcement at the beginning of the week concerning the discovery of a new oil well that is expected to double its production well into the next decade.The announcement was completely unexpected,and shares of Boom Ltd had been trading at a frantic pace since the announcement.At the beginning of the week the share price was 25 cents,by mid-week 37 cents and by the end of the week 50 cents.The market for Boom Ltd shares appears to be an example of:

(Multiple Choice)

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Question 31

The January effect refers to:

(Multiple Choice)

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Question 32

There are incentives for investors to seek information if:

(Multiple Choice)

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Question 33

Easton (1991)examined the reaction to dividend and profit announcements and found that:

(Multiple Choice)

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Question 34

During a 'bubble' period,prices depart from the true,fundamental value of the asset.

(True/False)

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Question 35

What are some of the seasonal patterns that have been found in returns that suggest it is possible to predict returns based on these patterns?

(Essay)

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(84)

Question 36

People will systematically tend to underestimate the level of market efficiency because:

(Multiple Choice)

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(84)

Question 37

Flukey Gold Mines makes an unexpected announcement regarding gold production at 2 pm.Shares of the company were traded at 12 pm,2.10 pm,2.30 pm and 4 pm.If the market for Flukey Gold Mines' shares is efficient,then at which trade will the newly established share price fully reflect the new information?

(Multiple Choice)

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(79)

Question 38

The price-earnings effect refers to the observation that:

(Multiple Choice)

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Question 39

The size effect refers to the observation that:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 55

Company insiders of XYZ consistently purchase shares of their company prior to increases in the share price and sell shares before decreases in the share price.Which of the following answers is consistent with the aforementioned observation?

The January effect in Australia is explained by:

Returns greater or less than those which the market expects from a security are known as:

Fama and French (1992)found that companies with a low book-to-market ratio tended to earn ___ returns,while companies with a high book-to-market ratio tended to earn _ returns.

Briefly,what are the implications of the EMH for: A)financial managers? B)investors in securities?

According to Shleifer (2000),the theoretical foundation of the efficient markets hypothesis is:

______________ analysis is the use of historical prices to detect trends that can be used to predict the future short-term course of prices.

Fundamental analysis suggests that sometimes the market is short-sighted and a share price cannot be justified based on the fundamental features of the company.

An efficient capital market is one in which:

The January effect refers to:

There are incentives for investors to seek information if:

Easton (1991)examined the reaction to dividend and profit announcements and found that:

During a 'bubble' period,prices depart from the true,fundamental value of the asset.

What are some of the seasonal patterns that have been found in returns that suggest it is possible to predict returns based on these patterns?

People will systematically tend to underestimate the level of market efficiency because:

The price-earnings effect refers to the observation that:

The size effect refers to the observation that:

Introduction

Consumption, Investment and the Capital Market

The Time Value of Money: An Introduction to Financial Mathematics

Applying the Time Value of Money to Security Valuation

Project Evaluation: Principles and Methods

The Application of Project Evaluation Methods

Risk and Return

The Capital Market

Sources of Finance: Equity

Sources of Finance: Debt

Payout Policy

Principles of Capital Structure

Capital Structure Decisions

The Cost of Capital and Taxation Issues in Project Evaluation

Leasing and Other Equipment Finance

Futures Contracts

Options and Contingent Claims

Analysis of Takeovers

International Financial Management

Management of Short-Term Assets: Inventory

Management of Short-Term Assets: Liquid Assets and Accounts Receivable

Filters

Exam 16: Capital Market Efficiency

Company insiders of XYZ consistently purchase shares of their company prior to increases in the share price and sell shares before decreases in the share price.Which of the following answers is consistent with the aforementioned observation?

The January effect in Australia is explained by:

Returns greater or less than those which the market expects from a security are known as:

Fama and French (1992)found that companies with a low book-to-market ratio tended to earn _________ returns,while companies with a high book-to-market ratio tended to earn _______ returns.

Briefly,what are the implications of the EMH for: A)financial managers? B)investors in securities?

According to Shleifer (2000),the theoretical foundation of the efficient markets hypothesis is:

______________ analysis is the use of historical prices to detect trends that can be used to predict the future short-term course of prices.

Fundamental analysis suggests that sometimes the market is short-sighted and a share price cannot be justified based on the fundamental features of the company.

An efficient capital market is one in which:

The January effect refers to:

There are incentives for investors to seek information if:

Easton (1991)examined the reaction to dividend and profit announcements and found that:

During a 'bubble' period,prices depart from the true,fundamental value of the asset.

What are some of the seasonal patterns that have been found in returns that suggest it is possible to predict returns based on these patterns?

People will systematically tend to underestimate the level of market efficiency because:

The price-earnings effect refers to the observation that:

The size effect refers to the observation that:

Introduction

Consumption, Investment and the Capital Market

The Time Value of Money: An Introduction to Financial Mathematics

Applying the Time Value of Money to Security Valuation

Project Evaluation: Principles and Methods

The Application of Project Evaluation Methods

Risk and Return

The Capital Market

Sources of Finance: Equity

Sources of Finance: Debt

Payout Policy

Principles of Capital Structure

Capital Structure Decisions

The Cost of Capital and Taxation Issues in Project Evaluation

Leasing and Other Equipment Finance

Futures Contracts

Options and Contingent Claims

Analysis of Takeovers

International Financial Management

Management of Short-Term Assets: Inventory

Management of Short-Term Assets: Liquid Assets and Accounts Receivable

Filters

Fama and French (1992)found that companies with a low book-to-market ratio tended to earn ___ returns,while companies with a high book-to-market ratio tended to earn _ returns.