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20 Cards in this Set
- Front
- Back
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If you find a consistent pattern where the price of stocks rise after some new information is released but the next day prices drop lower, that would be an example of market...
-underreaction -overreaction -efficiency -indicator -none of the above |
overreaction
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The joint test problem of testing market efficiency is the fact that every time you test for efficiency you are also testing the model that specifies efficiency at the same time.
T/F? |
true
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It has been found that small cap securities have had higher returns than their large cap counterparts, but it depends upon the time period you look at.
T/F? |
true
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Strong form market efficiency includes all public, private, and historical information.
T/F? |
true
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The January effect is focused on large cap stocks.
T/F? |
false
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The beginning of the month effect:
-doesn't exist -no longer exists -means stocks go higher in that period -means stocks go lower in that period |
means stocks go higher in that period
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What is the abnormal return of a stock that is expected to return 13% but has an actual return of 14%?
-cannot solve - +1% - -1% -none of the above |
+1%
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The price of a stock goes up a good deal on an unexpectedly positive earnings news announcement. What kind of market efficiency is this?
-weak-from -semi-strong form -strong form -none of the above |
semi-strong form
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The weak form of the efficient market hypothesis asserts that stock prices:
-fully reflect all historical price information -fully reflect all publicly available information -fully reflect all relevant information including insider information -may be predictable |
fully reflect all historical price information
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That you can find a strategy that works in the past but not in the future is often the result of:
-the gambler's fallacy -the random walk theory -data-snooping -the Loser's game -none of the above |
data-snooping
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A value investor would most likely:
-invest in stocks with high market value to book value -invest in stocks with low market value to book value -neither a or b |
invest in stocks with low market value to book value
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In the graph of the cumulative abnormal returns (CAR), it shows that if the CAR is positive before the announcement date, the stock will tend to go ____ after.
-up -down -flat -none of the above -I don't know |
up
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Stock returns are usually distributed normal, (bell curve)
T/F? |
false
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You can earn abnormal returns from buying stocks with significantly positive unexpected earnings announcements, even after the earnings announcement.
T/F? |
true
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The "true" price work by Robert Schiller suggest that stocks get over or under valued and can stay that way for year.
T/F? |
true
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Historically, on days when there is overcast or snow the markets tend to be down.
T/F? |
true
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Which is not a well known calendar anomaly?
-February effect -days of the week -beginning of the month -days before holidays -all are well known calendar anomalies |
February effect
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The idea of a financial "bubble" is that prices go very high but eventually come back down and at all times they reflect "true" or "accurate" values.
T/F? |
false
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If markets are efficient, why do we see so many investment professionals?
-they are useless and nothing more than well paid salespeople -they make the markets efficient -they make investors feel confident -they create inefficiencies -none of the above |
they make the markets efficient
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Stocks should not have abnormal returns from stock splits and in general they don't.
T/F? |
true
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