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AF5030 Efficient Market Hypothesis Quiz Flashcards | StudBud
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AF5030 Efficient Market Hypothesis Quiz
AF5030 Efficient Market Hypothesis Quiz
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StudBud Administration
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This with test your understanding of #EMH
Flashcards
14 cards
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Practice quiz
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Questions
14
Answers
1
The debate over whether markets are efficient will probably never be resolved because of
selection bias issues
lucky event issues
lucky event, magnitude & selection bias issues
magnitude issues
2
27% of actively managed ETFs outperform the market on average. Does this contradict stock market efficiency?
Yes
Can't Tell
No
3
Which of the following statements are true if the efficient market hypothesis holds?
It implies that security prices change for no reason
It implies that prices do not fluctuate
It implies that future events can be forecast with accuracy
It implies that price reflects all available information
4
Pablo PLC has never missed a dividend payment in 20-years. Under EMH Does this make it more attractive?
Can't Tell
Yes
No
5
If you believe in the mean reversal effect, you should
go short in poor performing stock
sell stocks in this period if you held bonds in the last
go long in good performing stock
sell stocks this period that performed well last period
6
A company, has consistently generated large profits for years. Is this a violation of the EMH?
No
Yes
Can't Tell
7
In an efficient market, all unexploited profit opportunities will be eliminated
False
True
8
Proponents of the EMH think technical analysts
should focus on relative strength
should focus on support levels
should focus on financial statements
are wasting their time
9
What is the January Effect in the US?
US Stock Markets tend to trade less volume in January
The dot.com bubble
Traders come back after Xmas are generally in a bad mood
Small/medium companies equities make abnormal returns
10
True or False according to EMH market value and intrinsic value should be the same
Give up!
True
False
11
Can insider trading result in abnormal trading profits in a Semi Strong Form Efficient market?
Only if they arbitrage
Can't Tell
Yes
No
12
When Maurice Kendall first examined stock price patterns in 1953, he found that...
there were no predictable patterns in stock prices
stock prices followed a distinct pattern
stock prices increased consistently for one week then drop
certain patterns tended to repeat within the business cycle
13
If stock prices follow a random walk...
price movements are predictable
price changes are random
it means that the market cannot be efficient
it implies that investors are irrational
14
Proponents of the EMH typically advocate
investing in hedge funds and a passive investment strategy
investing in hedge funds
buying individual stocks on margin and trading frequently
a passive investment strategy
