Business Finance - Some Lessons from Capital Market History

An efficient market is one that fully reflects all available __________. A. information B. redundancies C. investments D. inefficiencies

A

In an efficient market _________________, investments have a ____________ NPV. A. all;zero B. most; positive C. all;positive D. most;zero E. most;negative

A

In an efficient market, firms should expect to receive ___________ value for securities they sell. A. fair B. less than fair C. more than fair

A

Which type of stock price adjustment time path occurs when there is a bubble (price run up) in the path followed by a decline after the market receives information about the stock? A. overreaction and correction B. delayed reaction C. efficient market reaction

A

Studying market history can reward us by demonstrating that: A. there is a reward for bearing risk B. the greater the potential reward is, the greater the risk C. the greater the potential reward is, the lower the risk D. the stock market is nothing but a casino

A & B

The efficient markets hypothesis contends that __________ capital markets such as the NYSE are efficient. A. foreign B. well-organized C. monopolized D. newer

B