1. Which of the following is NOT an essential feature of an annuity with growth?
A. The first payment occurs at the end of the first period. B. The growth rate has to be higher than the discount rate. C. The payments grow at a constant rate across all periods. D. The payments stop at a certain point in time in the future.
2. Suppose the Strong Form of the Efficient Markets Hypothesis is correct. Which of the following is NOT an implication of the Hypothesis?
A. It is not possible to trade in stocks and consistently make a profit based on information in publicly released annual reports of companies. B. It is not possible to trade in stocks and consistently make a profit based on observing historical stock prices. C. The majority of mutual fund managers are able to consistently outperform the market portfolio. D. Corporate insiders cannot consistently profit from trading in their employer’s stock.