finance ch 14 smartbook

______ is the process of buying underpriced securities while selling overpriced substitutes.

Arbitrage

Serial ______ is the relationship between the current return on a security and the return on the same security over a later period.

Correlation

An efficient market is one in which any change in available information will be reflected in the company's stock price ______.

Immediately

An efficient market is one that fully reflects all available ______.

Information

Which of the following is true about the IPO market?

Large initial gains in stock prices often occur.

Investors who jump into a hot market believing that the high returns will continue for an even longer period are said to exhibit ______.

Representativeness

The investor trait of ______ occurs when investors draw conclusions from insufficient data.

Representativeness

If you beat the market with inside information, you have violated the concept of ______ form efficiency.

Strong

The evidence clearly does not support the existence of ______ form efficiency in the stock market.

Strong

True or false: Arbitrage is more risky than it appears at first glance.

True

The market return used in the abnormal return definition is based on ______.

a broad-based stock market index

An abnormal return is defined as ______.

a stock's actual return minus the market return

If you can beat the market by ______, then you are violating weak form efficiency.

analyzing historical price patterns

A short sale occurs if the seller initially__ the asset and then sells it.

borrows

Different types of information will affect stock prices ______.

differently

The types of equity and debt to sell is an example of a(n) ______.

financing decision

It is not uncommon for IPOs to ______ experience large gains.

initially

The serial correlation of a stock's returns is different from the correlation between the returns of two different stocks because it ______.

only involves the returns of one stock

Weak form efficiency considers trading strategies that use information based solely on ______ stock prices.

past

What types of information affect the rates at which stock prices adjust to new information?

past information publicly available information all information

A market is said to be ______ form efficient if prices incorporate all publicly available information.

semi strong

Which of the following have empirical support

semi strong weak

A __ sale occurs if the seller borrows the asset and then sells it.

short

Typical financing decisions include ______.

when to sell equity and debt how much equity and debt to sell the types of equity and debt to sell