Finance 325 Quiz 4

1) One important implication of the efficient markets hypothesis is that most investors A) should avoid active trading B) can benefit by purchasing high-beta stocks C) should trade actively to help ensure the highest overall gain in their portfolios D) should hold IPO stock issues for the long term

A) should avoid active trading

1) Which of the following lists events in chronological order from earliest to latest? A) Record date, declaration date, ex-dividend date B) Declaration date, record date, ex-dividend date C) Declaration date, ex-dividend date, record date D) Record date, ex-dividend date, declaration date

C) Declaration date, ex-dividend date, record date

1) Wealthy individuals who provide equity investment for new firms are called A) white knights B) red herrings C) angel investors

C) angel investors

1) Generally, initial public offerings (IPOs) are A) overpriced B) correctly priced C) underpriced D) There is no general trend

C) underpriced

1) According to evidence from surveys of CFOs, the top-most motive for firms to go public is to A) broaden the base of ownership B) enhance the reputation of the firm C) establish a market price/value for our firm D) create public shares for use in future acquisitions

D) create public shares for use in future acquisitions