This is an investment strategy that is with a well-diversified portfolio with no

attempt to outsmart the market. *

2 points

Aggressive
Diversified
Fundamental
Passive

[S1] In a strong form efficient market, it is impossible to earn a profit consistently.

[S2] In a strong form efficient market, price is equal to value. *
2 points

Statement 1 is true.
Statement 2 is true.
Both statements are true.
Both statements are false.

Which of the following statements is false? *

2 points

A simple example that illustrates the random walk notion is the flipping of a coin.
Despite a positive trend in stock prices, price changes may still follow a random walk.
Trading strategies based on historical market data are known as fundamental analysis.
If the market is semi-strong-form efficient, a diligent study of financial statements is of no
economic value.
The second and fourth statements are both false.

This EMT states that only past price information is reflected in prices. *
2 points

semi-strong form.
Weak form.
Strong form.
Semi-weak form

Random stock price changes are evidence against the *

2 points

random stock price changes are evidence for all forms of the EMT.
strong form of the EMT.
semi-strong form of the EMT.
weak form of the EMT.

The evidence that stocks with low price-to-earnings ratios tend to have higher
returns is an example of *
2 points

event anomalies.
seasonal anomalies.
accounting anomalies.
firm anomalies.
statistical anomalies.

The future value of future dividends after the horizon date is classified as *
2 points

hypothesis value
horizon value
terminal value
both B and C

This form hypothesis says that all publicly available information regarding the
prospects of a firm already must be reflected in the stock price. Information would
be past prices, fundamental data on the firm's product line, quality of management,
balance sheet composition, patents held, earnings forecasts and accounting
principles.
2 points

Weak
Semi-strong
Strong
Perfect