1. Using forward transactions allows:
- holders of common stock to lock in future dividend payments.
- corporations to reduce problems arising from future fluctuations in their dividend payments.
- both buyers and sellers to reduce risks associated with price fluctuations.
- the federal government to stabilize fluctuations in tax receipts.
2. The difference between a firm's assets and its liabilities is known as:
- limited liability
- equity
- profit
- stock
3. If the prices of financial assets follow a random walk, then :
- they should be easy to forecast, provided market participants have adaptive expectations.
- they should be easy to forecast, provided market participants have rational expectations.
- major traders in the market must not be making use of all available information about the assets.
- the change in price from one trading period to the next is not predictable.
4. The rate of return of a stock held for one year equals:
- the dividend yield minus the rate of capital gain.
- the dividend yield plus the rate of capital gain.
- the change in the price of the stock.
- the rate of capital gain minus the dividend yield.
5. A chief criticism of adaptive expectations is that :
- people have a hard time adapting
- it doesn't rely on technical analysis
- it assumes people ignore information that would be useful in making forecasts
- it violates the efficient markets hypothesis