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18 Cards in this Set
- Front
- Back
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Random walk
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The notion that stock price changes are random and unpredictable.
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Efficient market hypothesis
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The hypothesis that prices of securities fully reflect available information about securities.
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Weak-form EMH
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The assertion that stock prices already reflect all information contained in the history of past trading.
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Semistrong-form EMH
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The assertion that stock prices already reflect all publicly available information.
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Strong-form EMH
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The assertion that stock prices reflect all relevant information, including inside information.
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Technical analysis
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Research on recurrent and predictable stock price patterns and on proxies for buy or sell pressure in the market.
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Resistance level
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A price level above which it is supposedly unlikely for a stock or stock index to rise.
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Support level
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A price level below which it is supposedly unlikely for a stock or stock index to fall.
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Fundamental analysis
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Research on determinants of stock value, such as earnings and dividend prospects, expectations for future interest rates, and risk of the firm.
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Passive investment strategy
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Buying a well-diversified portfolio without attempting to search out mispriced securities.
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Index fund
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A mutual fund holding shares in proportion to their representation in a market index such as the S&P 500.
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Momentum effect
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The tendency of poorly performing stocks and well-performing stocks in one period to continue that abnormal performance in following periods.
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Reversal effect
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The tendecy of poorly performing stocks and well-performing stocks in one period to experience reversals in the following period.
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Anomalies
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Patterns of returns that seem to contradict the efficient market hypothesis.
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P/E effect
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Portfolios of low P/E stocks have exhibited higher average risk-adjusted returns than high P/E stocks.
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Small-firm effect
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Stocks of small firms have earned abnormal returns, primarily in the month of January.
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Neglected-firm effect
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Then tendency of investments in stock of less-well-known firms to generate abnormal returns.
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book-to-market effect
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The tendency for investments in shares of firms with high ratios of book value to market value to generate abnormal returns.
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