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10 Cards in this Set
- Front
- Back
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T/F
In the context of a Single Model Index, one can create a virtually risk-free portfolios with large number of stocks |
False: You can only get rid of firm-specific risks
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T/F
If markets= weak form-efficient, then it could be possible to earn high risk adjusted returns based on insider information. |
True:Weak form efficiency rules out high risk adjusted returnsbased on past price patterns, not inside information.
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T/F If fund manager A's expected return>fund B's expected return> market, then A has more skill than fund manager B |
False: You have to compare alpha & Sharpe ratio
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T/F
For a fixed APR, the more frequent the compounding, the higher the EAR |
True
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What is weak-form efficiency?
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Prices fully reflect past information
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What is semi-form efficiency?
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Prices fully reflect past info & public info - sorting through income statements will not generate profit
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What is strong-form efficiency?
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Prices fully reflect past info & public & private info - insider info will not provide profit
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T/F
Changing debt-to-equity ratio changes firm's equity beta, even in perfect markets |
True
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T/F
Asset beta only changes if you change assets themselves |
True
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When you increase debt-to ratio and leave assets unchanged, required rate of return on debt decreases and required rate of return on equity stays the same
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False
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