Random stock price changes are evidence against the:

  random stock price changes are evidence for all forms of the EMT.

  
semi-strong form of the EMT.
  
strong form of the EMT.
  
weak form of the EMT.
  

Suppose that weather predictions published in an almanac could be

used successfully to predict future prices of certain securities. This
would provide evidence against the:
  weak form of the EMT.
  
strong form of the EMT.
  
This finding does not provide evidence against any form of the EMT.
  
semi-strong form of the EMT.
  

Which version of the EMT states that only past price information is
reflected in prices?
  semi-strong form.
  
Weak form.
  
Strong form.
  

Which of the following statements is true?

I. In a strong form efficient market, there are no mispriced assets.

II. In a strong form efficient market, all information is equally available to all
investors.

  I only.
  
neither I nor II.
  
both I and II.
  
II only.
  
 SEC regulations make it illegal to use “inside information” to earn
profits. The SEC must believe that the market is:
  strong form efficient, but not semi-strong form efficient.
  
semi-strong form efficient, but not strong form efficient.
  
strong form efficient.
  
semi-strong form efficient, but not weak form efficient.
  

If you can use _____ information to earn abnormal returns

consistently, then the market cannot be _____ form efficient.
  private, semi-strong
  
private, weak
  
public, semi-strong
  
public, weak
  

Which of the following is true?

I. In a strong form efficient market, it is impossible to earn a profit

consistently.
II. In a strong form efficient market, price is equal to value.

  both I and II.

  
neither I nor II.
  
I only.
  
II only.
  

Which of the following best describes the small firm effect?

  Stocks of small companies have historically outperformed stocks of large
   companies.
Small companies go bankrupt more often than large companies.
  
Stocks of small companies pay lower dividends than stocks of large
   companies.
Stocks of small companies have historically underperformed stocks of large
   companies.
Stocks of small companies pay higher dividends than stocks of large
   companies.
 Which of the following is not a test of the semi-strong form of the
EMT?
  Stock price reactions to the announcement of stock.
  
Tests of the performance of mutual funds.
  
Tests of the performance of money managers.
  
Stock reaction to merger announcements.
  
Tests of serial correlation in stock returns.
  

Which of the following statements represents implications of EMT to

investors?
  Fundamental analysis can be used to earn abnormal profit.
  
Prior returns on an equally weighted portfolio of gold stocks predict gold
   returns.
The best portfolio management style is a passive one.
  
If the price-to-book value ratio is low, then the stock tends to outperform.
  
Changes in variance are somewhat predictable from past data.
  

The evidence that stocks with low price-to-earnings ratios tend to

have higher returns is an example of:
  event anomalies.
  
seasonal anomalies.
  
firm anomalies.
  
statistical anomalies.
  
accounting anomalies.
  

Which of the following statements is not an example of accounting

anomalies?
  Firms that are owned by few institutions tend to have higher returns.
  
If the dividend yield is high, then the stock tends to outperform the market.
  
Stocks of firms whose growth rate of earnings is rising tend to outperform.
  
Stocks with low P/E ratios tend to have higher returns.
  
Stocks with larger-than-anticipated earnings tend to continue to rise even
   after the announcement.
 Which of the following statements is correct?
  The existence of the January effect is consistent with the weak form of the
   EMT.
Most empirical tests of the strong form of the EMT take the form of an event
   study.
In general, academics support the EMT, whereas practitioners do not.
  
The more analysts there are recommending purchase of a particular stock,
   the more likely that stock price will go up.
Both the third and fourth statements are correct.
  

Which of the following statements is false?

  The EMT predicts that stock prices reflect all information that is relevant for
   the stock.
All successful managers believe in the EMT.
  
In general, academics support the EMT, whereas practitioners do not.
  
If a financial market is efficient, then the best estimate of the true worth of a
   security is given by its current market price.
There are three forms of the efficient market theory: weak, semi-strong, and
   strong EMT.

Which of the following statements is false?

  Trading strategies based on historical market data are known as fundamental
   analysis.
Despite a positive trend in stock prices, price changes may still follow a
   random walk.
A simple example that illustrates the random walk notion is the flipping of a
   coin.
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.
  

Which of the following statements is false?

  The strong form of the EMT states that current stock prices reflect all publicly
   and privately available information.
If the strong form of the EMT is true, insiders would not profit from trading
   on their information.
If an analyst believes that the semi-strong form, but not the strong form, of
   the EMT is true, then he should be able to earn excess returns based on
 public and private data.
If an analyst believes that the weak form, but not the semi-strong form, of
   the EMT is true, then he should be able to earn excess returns based on
public and private data but not on historical prices.
In efficient markets, resources are allocated to various firms in an effective
   manner because those firms with good prospects will be able to raise
additional capital in the primary market on good terms.

Which of the following statements is correct?

  If the market is efficient, both passive and active management strategies are
   relevant.
If the stock market is inefficient, then both security analysis and portfolio
   analysis are economically important.
If you do not diversify, you expose yourself to higher risk, but you receive
   higher expected return.
The semi-strong form of the EMT implies that all stocks are correctly priced;
   therefore you can select stocks at random.
If the semi-strong form of the EMT holds, fundamental analysis is
   economically worthless, but technical analysis is important.