Finance Final

what is the probability that small company stocks will product an annual return that is more than one standard deviation below the average?

16%

For the period 1926-2016, the average risk premium on large company stocks was about:

8.6%

Which one of the following statements is correct concerning market efficiency?

A firm will generally receive a fair price when it issues new shares of stock if the market is efficient.

Which one of the following statements related to risk is correct?

Every portfolio that contains 25 or more securities is free of unsystematic risk.

Which one of the following is an example of unsystematic risk?

National decrease in consumer spending on entertainment

Which one of the following will be constant for all securities if the market is efficient and securities are priced fairly?

Reward-to-risk ratio

Which form of market efficiency would most likely offer the greatest profit potential to an outstanding professional stock analyst?

Weak

The standard deviation of a portfolio:

can be less than the standard deviation of the least risky security in the portfolio.

Assume all stock prices fairly reflect all of the available information on those stocks. Which one of the following terms best defines the stock market under these conditions?

efficient capital market

The expected rate of return on a stock portfolio is a weighted average where the weights are based on the:

market value of the investment in each stock

The average compound return earned per year over a multiplayer period is called the ___ average return.

real.

Which one of the following earned the highest premium over the period 1926-2016?

small company stocks

The principle of diversification tells us that:

spreading an investment across many diverse assets will eliminate some of the total risk.

which ne of the following is the most likely reason how a stock price might not react at all day that new information related to the stock's issuer is released. Assume the market is semistrong form efficient

the information was expected.

Standard deviation measures which type of risk?

total risk

You are aware that your neighbor trades stocks based on confidential information he overhears at his workplace. This information is not available to the general public. This neighbor continually brags to you about the profits he earns on these trades. Given this, you would tend to argue that the financial markets are at best ________ form efficient.

weak