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Quiz #4 -- FTMBA CORPFIN 2019 Flashcards | StudBud

Explore/Quiz #4 -- FTMBA CORPFIN 2019

Quiz #4 -- FTMBA CORPFIN 2019

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Questions 5

Answers

1
"Random walk" belief about stock prices is believing that ...
... they occasionally like having a walk in the park.
... they can be predicted using the randomness theory.
... their change is random.
... the return on stocks does not depend on their price.
2
You believe in a given market the stock prices reflect past prices plus all public information.
This market has a weak efficiency.
This market has a semistrong efficiency.
This market has a strong efficiency.
This market has an efficient memory.
3
If you believe that "markets have no memory," then which of the following must NOT be done?
Trying to issue equity capital when the market is on rise.
Trying to change the capital structure to find its optimum.
Trying to estimate the cost of equity using the CAPM.
Trying to identify positive NPV projects.
4
If you "trusted market prices" then you would not attempt to ...
... issue debt capital when positive NPV projects exist.
... issue equity capital when positive NPV projects exist.
... estimate the WACC of your assets.
... acquire a firm for the reason its stock is underpriced.
5
In a market with strong efficiency there exist investors who can ...
... consistently earn returns higher than the market.
... sometimes earn returns higher than the market.
... consistently correctly predict economic cycles.
... consistently correctly predict price changes.