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21 Cards in this Set

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Abnormal return
Return on a stock beyond what would be predicted by market movements alone. Cumulative abnormal return (CAR) is the total abnormal return for the period surrounding an announcement or the release of information.
Anomalies
Patterns of returns that seem to contradict the efficient market hypothesis.
Book-to-market effect
The tendency for stocks of firms with high ratios of book-to-market value to generate abnormal returns.
Cumulative abnormal return
See abnormal return.
Efficient market hypothesis
The prices of securities fully reflect available information. Investors buying securities in an efficient market should expect to obtain an equilibrium rate of return. Weak-form EMH asserts that stock prices already reflect all information contained in the history of past prices. The semistrong-form hypothesis asserts that stock prices already reflect all publicly available information. The strong-form hypothesis asserts that stock prices reflect all relevant information including insider information.
Event study
Research methodology designed to measure the impact of an event of interest on stock returns.
Fundamental analysis
Research to predict stock value that focuses on such determinants as earnings and dividends prospects, expectations for future interest rates, and risk evaluation of the firm.
Index fund
A mutual fund holding shares in proportion to their representation in a market index such as the S&P 500.
Momentum effect
The tendency of poorly performing stocks and well-performing stocks in one period to continue that abnormal performance in following periods.
Neglected-firm effect
That investments in stock of less well-known firms have generated abnormal returns.
P/E effect
That portfolios of low P/E stocks have exhibited higher average risk-adjusted returns than high P/E stocks.
Passive investment strategy
See passive management.
Random walk
Describes the notion that stock price changes are random and unpredictable.
Resistance level
A price level above which it is supposedly difficult for a stock or stock index to rise.
Reversal effect
The tendency of poorly performing stocks and well-performing stocks in one period to experience reversals in following periods.
Semistrong-form EMH
See efficient market hypothesis.
Small-firm effect
That investments in stocks of small firms appear to have earned abnormal returns.
Strong-form EMH
See efficient market hypothesis.
Support level
A price level below which it is supposedly difficult for a stock or stock index to fall.
Technical analysis
Research to identify mispriced securities that focuses on recurrent and predictable stock price patterns and on proxies for buy or sell pressure in the market.
Weak-form EMH
See efficient market hypothesis.