1. The historical fact that, on average, mutual fund managers have not been able to beat the market supports ___________.
Market competition.
Strong form efficiency.
Semi-strong form efficiency.
Weak form efficiency.
Market deregulations.
2. A market in which insider trading do not exist is __________.
Strong form efficient.
Semi-strong from efficient.
Weak form efficient.
Systematically efficient.
Completely efficient.
3. The best definition of efficient market reaction: is:
The price instantaneously adjusts to and fully reflects new information; there is no tendency for subsequent increases and decreases.
The price partially adjusts to the new information; 10 days elapse before the price completely reflects the new information.
The price over adjusts to the new information; it “overshoots” the new price and subsequently corrects.
Situation in which security prices reflect available information.
Statistical measure of maximum loss used by banks and other financial institutions to manage risk exposures.
4. You have discovered from looking at charts of past stock prices that if you buy just after a stock price has declined for three consecutive days, you make money every time! This is a violation of ________ market efficiency.
weak form
semi-weak form
semi-strong form
strong form
TSX stock
5. Suppose you purchase a stock expecting the price to rise in the coming year. After one year, your stock has actually decreased in value, due primarily to adverse information released during the year. Which of the following describes this result?
This is not a violation of market efficiency.
This is a violation of weak form efficiency.
This is a violation of semi-strong form efficiency.
This is a violation of strong form efficiency.
This is a violation of all forms of market efficiency.
6. You discover that you can make greater than expected returns by buying stock in firms whenever the growth rate in sales predicted by an investment survey exceeds the stock's current price-earnings ratio. Which of the following describes this event?
This would not be a violation of market efficiency.
This would be a violation of weak form efficiency.
This would be a violation of semi-strong form efficiency.
This would be a violation of strong form efficiency but not of semi-strong form efficiency.
This would be a violation of all forms of market efficiency.